Understanding HSA-eligible plans
How HSA-eligible plans work
An
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.
Get more information on HSA-eligible plans (also called
)), including both the minimum and maximum yearly deductible, from the IRS.
- 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 plan.
Important facts about HSA-eligible plans
| Benefits of HSA-eligible plans | But also think about ... |
|---|---|
| HSA-eligible plans may have lower monthly premiums. | Your deductible — the costs you pay before the plan — is often higher. |
| 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 must stop contributing to your HSA when you enroll in any part of Medicare. But, you may withdraw money from your HSA at any time to help pay for qualified medical expenses that Medicare or Medicare Supplement Insurance (Medigap) doesn’t cover. |
| 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. | |
| HSA-eligible plans are available in most areas, and may be available as qualified health plans at the Bronze, Silver, or Gold levels on HealthCare.gov. HSA-eligible plans may also be available for enrollment directly through health insurance companies and may be offered by your employer. | HSA-eligible plans 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 HSA-eligible plan may provide certain preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. |