What Does it Mean When a Health Plan is HSA Eligible?

When a health plan is labeled as HSA eligible, it means that the plan meets the requirements set by the government for being used in conjunction with a Health Savings Account (HSA). An HSA is a tax-advantaged savings account that you can use to pay for qualified medical expenses if you are enrolled in a high-deductible health plan (HDHP).

Being HSA eligible indicates that the health plan:

• Qualifies as a high-deductible health plan (HDHP) according to IRS guidelines.
• Allows you to open and contribute to an HSA account.
• Meets the minimum deductible and out-of-pocket maximum limits set by the IRS.

Here are some key points to understand:

• An HDHP typically has a higher deductible than traditional health plans but lower monthly premiums.
• Contributions to an HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses.
• HSA funds roll over year after year, unlike Flexible Spending Accounts (FSAs).
• Individuals, employers, or both can contribute to an HSA up to certain limits set by the IRS.

An HSA eligible health plan not only qualifies as a high-deductible health plan (HDHP) but also offers numerous financial benefits, making healthcare more affordable in the long run.