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Health Savings Account FAQs


Health Savings Account Frequently Asked Questions and Contribution Limits


What is a health savings account?

A health savings account is an alternative to traditional health insurance. It is a savings product that offers a different way for consumers to pay for their health care.  HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.

You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs.  An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the health savings account.

You own and you control the money in your HSA.  Decisions on how to spend the money are made by you without relying on a third party or a health insurer.


What is a high deductible health plan (HDHP)?

You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses, (i.e. your “deductible”) but will generally cover you after that.  Of course, your HSA is available to help you pay for the expenses that your plan does not cover.


I don't have health insurance, can I get an HSA?

You cannot establish and contribute to an HSA unless you have coverage under an HDHP.


I'm on Medicare, can I have an HSA?

You are not eligible for an HSA after you have enrolled in Medicare.  If you had an HSA before you enrolled in Medicare, you can keep it.  However, you cannot continue to make contributions to an HSA after you enroll in Medicare.


I don't have a job. Can I have an HSA?

Yes, if you have coverage under an HDHP.  You do not have to have earned income from employment - in other words, the money can be from your personal savings, income from dividends, unemployment, or welfare benefits, etc.


How much does an HSA cost?

An HSA is not something you purchase; it’s a checking account into which you can deposit money on a tax-preferred basis.