What Are HSA-Eligible Plans?

HSA-Eligible Plans (also known as High Deductible Health Plans or HDHPs) allow you to save on healthcare costs by pairing with a Health Savings Account (HSA). This type of savings account lets you set aside pre-tax money to cover qualified medical expenses.

Benefits of HSA-Eligible Plans:

• Lower Monthly Premiums: Enjoy reduced monthly premiums, although you’ll have a higher deductible.
• Tax-Free Savings: Use pre-tax funds from your HSA to cover your deductible and other qualified expenses, saving on out-of-pocket costs.
• Carry Over Balance: Unused HSA funds roll over each year, allowing you to build savings for future medical needs.

Eligibility Requirements:

• Minimum Deductible: The amount you pay annually before insurance coverage begins.
• Maximum Out-of-Pocket Costs: The highest total amount you could pay in a year for covered services.

Note: HSA-eligible plans may have high deductibles that can approach the maximum out-of-pocket limits.

Understanding HSA-Eligible Plans

Health Savings Accounts (HSAs) offer a tax-advantaged way to manage healthcare costs. They are used in conjunction with HSA-eligible plans, also known as High Deductible Health Plans (HDHPs).

Key Features:

• Pre-Tax Contributions: Contribute funds to your HSA on a pre-tax basis to cover:

  • Coinsurance
  • Copayments
  • Deductibles
  • Qualified medical expenses (includes some dental, drug, and vision costs) – for a complete list, visit IRS.gov.

• Plan Characteristics:

  • Lower Monthly Premiums: HSA-eligible plans generally have lower monthly premiums.
  • Higher Deductibles: These plans often come with higher deductibles.
  • Preventive Care: May offer certain preventive services without a deductible or with a reduced deductible.

Tax Advantages and Restrictions:

• Tax-Deductible Contributions: Contributions to your HSA are deductible from your taxable income.
• Funds Roll Over: Unused HSA funds roll over annually and can accumulate interest tax-free.
• Premiums: HSA funds typically cannot be used to pay insurance premiums.
• Post-65 Flexibility: After age 65, HSA funds can be used for any purpose, though non-medical withdrawals will be taxed as income.
• Retirement Transition: Contributions must cease six months before retirement or Medicare eligibility, but funds can still be used for qualifying medical expenses not covered by Medicare.

Finding and Utilizing HSA-Eligible Plans

Health Savings Account (HSA) Contributions: Annual contribution limits for HSAs are set and adjusted yearly for inflation. For detailed information on contribution limits and HSA-eligible plans (also known as High Deductible Health Plans (HDHPs)), refer to IRS guidelines.

How to Find HSA-Eligible Plans: To locate HSA-eligible plans on HealthCare.gov:

1. Go to the plan comparison section.
2. Click on "Add filters" located at the top left.
3. Select the checkbox for “Eligible for an HSA” to view relevant options.

Setting Up Your Health Savings Account (HSA)

Opening an HSA: After enrolling in an HSA-eligible plan, you will need to open an HSA with a financial institution separately.

Finding an HSA Provider:

• Online Research: Explore various HSA providers online to compare options.
• Insurance Company: Inquire with your health insurance provider about partnered HSA financial institutions.
• Bank Inquiry: Contact your bank to see if they offer an HSA that aligns with your needs.

Choosing the Right HSA:

• Fees: Be aware of any associated fees, such as account setup or maintenance charges.
• Services and Features: Evaluate banking options, including debit cards and online account management, as these can vary by provider.
• Deposit Methods: Consider how you will make pre-tax contributions and any variations in deposit methods offered.

Additional Information: For details on HSA-eligible plans (High Deductible Health Plans, or HDHPs), including annual deductible limits, consult the IRS guidelines.