High Deductible Health Plans (HDHPs) & Health Savings Accounts (HSAs)

How HSAs work with HDHPs

An HSA is an account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses, as defined in the tax law. See IRS Publication 502 (PDF) for more information.

  • By using pre-tax dollars in an HSA to pay for deductibles, copayments, coinsurance, and other qualified expenses, including some dental, drug, and vision expenses, you can lower your overall health care costs.
  • You can contribute to an HSA only if you have an HSA-eligible HDHP.

Important facts about HDHPs and HSAs

Benefits of HDHPs with HSAs But also consider ...

HDHPs may have lower monthly premiums than non-HDHPs.

Your deductible — the costs you pay before the HDHP starts to pay — is higher than for many non-HDHPs.

You can deduct the amount you deposit in an HSA from the income you pay federal income tax on.

If you have money in your HSA when you turn 65, you can spend it on anything you want — but if you aren’t spending it for a qualified medical expense it will be taxed as income at your then current tax rate.

You can use HSA funds to pay for deductibles, copayments, coinsurance, and other qualified medical expenses. Withdrawals to pay eligible medical expenses are tax-free.

Unspent HSA funds roll over from year to year, allowing you to build tax-free savings to pay for medical care later. HSAs may earn interest, which is not subject to taxes.

HDHPs are available in most areas, and may be available as qualified health plans at the Bronze, Silver, or Gold levels on HealthCare.gov. HDHPs may also be available for enrollment directly through health insurance companies and may be offered by your employer.

HDHPs may not be available in your area. You’ll find out when you compare plans on HealthCare.gov, or when you contact an agent, broker, or insurance company.

An HDHP may provide certain preventive care benefits without a deductible or with a deductible less than the minimum annual deductible.