What is an HSA?
Who is this for?
If you’re interested in health savings accounts, this information can help you understand more about them and how to use them.
A health savings account, or HSA, is a kind of health spending account that's part of consumer-directed health care. “Consumer directed” means you manage more of the money you spend—and save—on medical expenses.
Who can have an HSA?
You're eligible if you:
- Are enrolled in an HSA-compatible high-deductible health plan
- Can't be claimed as a dependent on someone else's tax return
- Aren't covered by or already enrolled in another health care plan that isn't HSA-compatible
- Aren't enrolled in Medicare
What's a high-deductible insurance plan?
A deductible is the amount of money you have to pay before your health insurance begins to pay. Typically, the higher the deductible, the lower your monthly premiums are.
Here are the 2013 amounts for plans considered high-deductible that work with HSAs:
- For individuals, the minimum deductible is $1,250.
- For families, the minimum deductible is $2,500.
How does an HSA work?
A health savings account is like a combination 401(k) and checking account for your medical expenses.
Most people put money into their HSA by having it deducted before taxes from their paycheck. But you, and even family and friends, can make a deposit to your HSA at any time. You can deposit post-tax money into your HSA and deduct your contributions from your income tax.
Then, when you have a medical expense your health plan doesn't cover, you can use the money in your HSA. For more information about everything you can do with a health savings account, read "How can I use my HSA?"
What are the advantages of an HSA?
- HSA-eligible health care plans generally cost less per month than other plans.
- You own and control the money in your HSA. You decide how to spend the money without relying on a third party or a health insurer.
- Although everyone’s situation will be different, a family in the 28 percent tax bracket that puts $5,000 into an HSA will reduce their federal income tax by about $1,400.
- HSA contributions can be used to pay for a wide range of medical expenses not typically covered by other health care plans or health care accounts.
- You can invest the money in your HSA to maximize its value.
- Your HSA is completely portable. If you change jobs, move to another state or become unemployed, your HSA goes with you.
Is an HSA right for you?
If you like the idea of lowering your taxes and health insurance costs, and having more say in your health care spending, an HSA could be a good fit.
As long as you have an HSA-eligible plan, you're all set to enroll.
For 2014, our Healthy Blue HSA℠ works with our bronze plans as well as Blue Cross® Premier Silver and Blue Cross® Silver, a Multi-State plan.