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Learn About Health Savings Accounts


Health savings accounts (HSAs) are the fastest-growing type of health account. Why? Because they put your health care spending in your own hands. 

Think of an HSA as a special savings account for medical expenses. You decide how and when to use it on eligible medical expenses and receive federal tax benefits at the same time.


An HSA is a tax-exempt account designated for IRS-approved health and medical expenses. HSAs can only be used with a qualified high-deductible health plan, which is a health insurance plan with lower premiums and higher deductibles than a traditional health plan.

HSAs allow you to pay for current medical expenses and save for future IRS-approved medical and retiree health expenses on a tax-free basis. You can also earn interest tax-free and use that interest tax-free.

Your HSA funds roll over from year to year. After age 65, you can use your HSA funds for any purpose without penalty (you will, however, pay taxes on funds withdrawn).


You can only contribute funds to an HSA if you enrolled in a qualified high-deductible health plan (HDHP). An HDHP is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. In an HDHP, preventive services are covered at 100%. Other benefits start after you reach your deductible.

An HDHP must also meet deductible and out-of-pocket requirements set by the IRS as follows:

2019 High-Deductible Health Plan Limits

HSA Contribution Limit
The most you can put into your HSA in 2019
Minimum Deductible
Your deductible must be this amount or higher to qualify for an HSA in 2019
Out-of-Pocket Maximum
The maximum out-of-pocket costs you will have with an HSA in 2019

Single: $3,500 *
Family: $7,000 *

If you're 55 or over, you can contribute an additional $1,000 annually

Single: $1,350 *
Family: $2,700 *
Single: $6,750 *
Family: $13,500 *

*IRS indexed amounts for HSAs are adjusted annually for cost of living.

No matter what month you enroll in your plan, you are still eligible to contribute the full annual maximum amount for that year, but you need to stay in the plan for at least 12 months after the end of that tax year, or your contribution may be taxed as gross income or subject to other taxes.

Not sure if your health plan meets these requirements?

Call Customer Service at the number on the back of your Medica ID card.


It is not mandatory to have an HSA paired with your high-deductible health plan; however, it is a great benefit for you.

Some of the benefits are:

  • You're in control of your funds. You decide when and how to spend or save the money in your HSA. You can use your HSA money to pay for qualified medical expenses tax free.
  • Money in your HSA belongs to you. If you change employers or health plans, retire or move, you take your account with you.
  • Any unused balance rolls over from year to year.
  • Some HSAs allow funds to be invested or earn interest. These earnings are tax-free. Check with your HSA administrator for more information.
  • Your employer may allow you to make payroll contributions to your HSA, which lowers your payroll taxes.
  • You can use the account to save money for retirement. After age 65, your HSA funds can be used for any purpose without penalty (you will, however, pay taxes on funds withdrawn). If you die, remaining HSA funds go to your beneficiary.

Opening an Account

Once you are enrolled in your HSA-compatible plan, choose any HSA administrator (typically a bank) to manage your account.

Where should you begin?
Contact your bank or credit union to open your HSA and begin contributing funds. Or, you can select our preferred administrator, HSA Bank. HSA Bank has more than 10 years of experience administering HSAs. They provide low fees, competitive rates, unique investment opportunities through Voya Financial™, and convenient account options.

You can establish your HSA after your health plan’s coverage start date. If your health plan begins on any day other than the first of the month, you can establish your HSA on the first day of the following month.

Visit the Voya FinancialTM website » 

Qualified Expenses

Funds you withdraw from your HSA are tax-free when you use them to pay for IRS-approved medical expenses. Any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate, plus a 20% tax penalty if you're under age 65.

You can pay for IRS-approved medical expenses such as:

  • Your deductible, coinsurance and copays
  • Prescription drugs
  • Over-the-counter medications with a doctor’s prescription
  • Dental expenses
  • Orthodontic expenses (if they are for an adult, you will need a letter of medical necessity)
  • Vision expenses, including laser eye surgery
  • Hearing exams and hearing aids / batteries

This is just a partial list of eligible expenses. For a complete list, see IRS Publication 502 on

Note: When you spend HSA funds, always save receipts and insurance statements for your tax records.

Medica and its employees are not qualified tax advisors. This information is provided only as a high-level guide and is not intended as tax or legal advice.

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