Can You Make HSA Contributions if You Don't Have a High Deductible Plan?

When it comes to Health Savings Accounts (HSAs), many people wonder whether they can make contributions without having a high deductible health plan. The simple answer is no, you cannot contribute to an HSA if you are not enrolled in a high deductible health plan (HDHP).

Here’s why:

• Eligibility Requirement: To be eligible to contribute to an HSA, you must be enrolled in an HDHP that meets specific requirements set by the IRS.
• Minimum Deductible: HDHPs have higher deductibles than traditional health plans. For 2021, the minimum deductible for an individual HDHP is $1,400, and for a family HDHP, it is $2,800.
• Maximum Out-of-Pocket Expenses: HDHPs also have limits on maximum out-of-pocket expenses, which help determine HSA eligibility. In 2021, the maximum out-of-pocket limit for self-only coverage is $7,000, and for family coverage, it is $14,000.
• Contributions and Tax Benefits: Contributions to an HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses. These tax advantages are available only to individuals with an HSA paired with an HDHP.

While you cannot contribute to an HSA without an HDHP, there are alternative options available for those who do not have an HDHP:

• Consider a Flexible Spending Account (FSA) if your employer offers one. FSAs allow you to set aside pre-tax dollars for medical expenses, but they do not have the same tax advantages as HSAs.
• Explore other savings vehicles like a Health Reimbursement Arrangement (HRA) if offered by your employer. HRAs are employer-funded accounts that can be used for eligible medical expenses.
• Consult with a financial advisor to discuss other savings and investment options that can help you cover medical costs without an HSA.

Many individuals are curious about the possibility of contributing to a Health Savings Account (HSA) without having a high deductible health plan (HDHP). Unfortunately, the answer remains no—you must be enrolled in an HDHP to make contributions to an HSA.

This requirement exists because:

• Eligibility Requirement: HSAs are designed specifically for those covered by HDHPs, adhering to IRS guidelines to ensure proper use and benefits.
• Minimum Deductible: To qualify, your HDHP must meet certain deductible thresholds—$1,400 for individual plans and $2,800 for family plans, as outlined in the 2021 guidelines.
• Maximum Out-of-Pocket Expenses: Additionally, the IRS sets yearly caps on out-of-pocket expenses. For 2021, this was $7,000 for individuals and $14,000 for families.
• Contributions and Tax Benefits: HSAs extend exceptional tax advantages, allowing for pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses—benefits exclusive to those with an HDHP.