An HSA is a Health Savings Account where you can put aside pre-tax dollars to pay for qualifying medical expenses. Before you open an HSA, it is important to figure out if you are eligible to open one and what the contribution limits are for the year.

HSA Eligibility:

• You must be covered under a qualifying high-deductible health plan (HDHP)
• You have no other health coverage except what is permitted by the IRS
• You are not enrolled in Medicare, TRICARE or TRICARE for Life
• You cannot be claimed as a dependent on someone else’s tax return
• You haven’t received Veteran’s Affairs benefits within the past three months, except for preventive care (if you have a disability rating from the VA, this exclusion does not apply)
• You do not have a health care flexible spending account (FSA) or health reimbursement account (HRA)

There may be other restrictions and exemptions and it is recommended that you speak with a financial adviser to discuss your personal circumstances.

What is a High-Deductible Health Plan anyway?

For 2019, the IRS defines a qualifying HDHP as having:

• A minimum annual deductible of $1,350 for an individual/ $2,700 for a family
• An out-of-pocket maximum of $6,750 for an individual/ $13,500 for a family

Maximum Contributions for HSAs for 2019

• $3,500 for individuals
• $7,000 for families
• add $1,000 if you are 55+ years old

How to open an HSA account:

Opening and HSA account is similar to opening a checking account. You will need to find a bank that offers HSAs. We recommend Optum Bank to a lot of our clients as they tend to have the lowest fees. Optum Bank allows you to enroll online. All you need is your social security number, a valid email address and your health insurance ID card. There are many different banks that offer HSAs so it is important to do some research to see which one is best for you. Once you set up an HSA account, you can contribute up to the maximum amount allowed for the year. You can use your HSA for qualified medical expenses including: copays, prescription drugs, hospital services and eyeglasses. Whatever funds you don’t use during the year will roll-over to the next year.