Health Savings Account (HSA) is an account to save for future medical expenses. There are certain advantages to putting money into these accounts, including favorable tax treatment.
Who can have an HSA?
Any adult can contribute to an HSA if they meet the following requirements.
- Have coverage under an HSA-qualified “high deductible health plan” (HDHP)
- Have no first-dollar medical coverage*
- Are not enrolled in Medicare
- Are not claimed as a dependent on someone else’s tax return
Who can make contributions?
Contributions can be made by you, your employer or both. However, it is important to note that contributions are limited annually. If you make a contribution, you can deduct that amount when completing your federal income tax return.
If you enroll in Medicare, contributions to the account must stop. You can, however, keep the money in your account and use it to pay for medical expenses tax-free.
*Other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted.