Question
What is an HSA, and can I open one?
Short answer
A health savings account is a tax-free savings account for medical costs. You can open one only if you're covered by a high-deductible health plan that qualifies, and have no other health coverage that disqualifies you.
How it works
- Money you put in is tax-deductible, it grows tax-free, and withdrawals for medical costs are tax-free too.
- The money is yours and rolls over every year, even if you change jobs or plans. That's the big difference from an FSA.
- The IRS sets a yearly contribution limit, and an employer may add money too.
Who can open one
- You must be covered by an HSA-eligible high-deductible plan. The plan documents say if it qualifies.
- You can't have other coverage that pays before the deductible, such as a regular health plan through a spouse.
- You can't be enrolled in Medicare or claimed as someone else's tax dependent.
Is it a good fit?
It works best if you're healthy, can afford the higher deductible if something happens, and want to save for future medical costs. If you expect big bills this year, a plan with a lower deductible may cost less overall.
This is general information about how US policies usually work. Your own policy's wording and your state's rules decide the details.