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Take control of your health care spending with an HSA

Put your money in a savings account for medical expenses.

A Health Savings Account (HSA) is a great way to save money for qualified medical expenses. You decide how and when to use the money, and you get tax benefits.

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How HSAs work

What’s an HSA?

An HSA is a special savings account for health-related spending. You or your employer can deposit money into it, tax free. This means you don't have to pay income tax on what you contribute each year (up to a limit). You can then use the money in your HSA for medical expenses.

HSAs work together with high-deductible health insurance policies. With this type of insurance, you pay a lower premium each month to keep your coverage. The tradeoff is a higher deductible, which is the amount you pay each year before your insurance pays.

Here's how it all works:

  • You and/or your employer contribute tax-free money to your HSA.
  • You use the money in your HSA to pay for approved medical and dental costs.
  • You pay 100 percent of covered costs until you've met your deductible. One important exception: Your plan pays for all preventive care.
  • After you meet your deductible, your insurance starts to pay. You'll still have some costs after you meet your deductible. Coinsurance (a percentage of the charges for a health care service that you pay) may apply.
  • You'll have a yearly out-of-pocket limit. Once you reached this limit in payments, the plan will pay 100 percent of covered costs.
  • Unspent money stays in your HSA, year after year. You decide when and how to use it.
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Eligibility

Who’s eligible for an HSA?

To be eligible to contribute to an HSA, you must:
  • Be covered by a qualified high-deductible health insurance plan
  • Have no other health coverage
  • Not be enrolled in Medicare
  • Not be listed as another person's dependent for tax purposes

Are there any exceptions to these eligibility rules?

Yes. While you can’t have health insurance outside of your high-deductible plan, you can be insured for accidents, dental care, disability, long-term care, and vision care. Workers' compensation, specified disease, and fixed indemnity coverage is also permitted.

How much can I contribute to my HSA?

Check out the table below for 2022 amounts and limits. Keep in mind we're not qualified tax advisors. This is a high-level guide and not intended as tax or legal advice. Check with a tax professional for advice that's specific to you.
 2022 HSA amounts and limits

Single

Minimum deductible

$1,400

Maximum out-of-pocket

$7,050

Contribution limit

$3,650

55+ contribution*

$1,000

Family

Minimum deductible

$2,800

Maximum out-of-pocket

$14,100

Contribution limit

$7,300

55+ contribution*

$1,000

* Catch-up contributions are allowed. This means people 55 and older can contribute more than the limit. Catch-up contributions can be made at any time during the year in which the HSA participant turns 55.

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Benefits

Do I have to have an HSA paired with my high-deductible health plan?

No. You need a high-deductible plan to have an HSA. But you don't need an HSA to have a high deductible plan. People pair them because it's a good way to set aside tax-free money knowing that it can be used to pay medical expenses (including paying the high deductible) if needed.

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Opening an account

How do I open an HSA?

First, enroll in a high-deductible health insurance plan. Then find a qualified HSA administrator. This is a financial institution that manages HSAs. Like a bank (but for HSAs specifically) it'll hold your money in a secure account until you need it. Our preferred HSA administrator, Medsurety, has helpful information and next steps available online.

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Qualified expenses

How can I spend the money in my HSA?

You can use it for:

  • Deductible and coinsurance payments
  • Routine health care like office visits, X-rays, and lab work
  • Hospital expenses like surgery, room and board, and more
  • Dental care such as cleanings, fillings, and crowns
  • Vision care such as eye exams, glasses, and contacts
  • Prescriptions
  • Eligible over-the-counter items, such as:
    • First aid dressings and supplies like bandages and rubbing alcohol
    • Contact lens solutions and supplies
    • Diagnostic products like thermometers, blood pressure monitors, and cholesterol testing supplies
    • Insulin and diabetic supplies

You can find a full list of HSA eligible expenses on the IRS website in IRS Publication 502.

Want to know more?

Find out more about coverage, costs, and other insurance basics.

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