What Plan Qualifies for HSA? - Understanding Health Savings Accounts

When it comes to Health Savings Accounts (HSAs), not all healthcare plans qualify for this tax-advantaged savings account. To be able to open and contribute to an HSA, you must be enrolled in a High Deductible Health Plan (HDHP).

An HDHP is a specific type of health insurance plan that meets certain criteria set by the IRS. Here are some key points to remember:

• An HDHP typically has higher deductibles than traditional health plans but also comes with lower premiums.
• For 2021, an HDHP is defined as a plan with a minimum deductible of $1,400 for an individual and $2,800 for a family.
• An HDHP can cover preventive care services before the deductible is met, but for other services, you'll have to pay out-of-pocket expenses until you reach your deductible.

Once you are enrolled in an HDHP, you are eligible to open an HSA and start saving for qualified medical expenses tax-free. Contributions to an HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free for medical expenses.

If you have an employer-sponsored HDHP, you may also benefit from employer contributions to your HSA, which can help boost your savings even further.

It's important to note that not all plans marketed as high deductible plans qualify as HDHPs for HSA purposes. To ensure that your plan is eligible, review the plan details or consult with your insurance provider.

Health Savings Accounts (HSAs) are a smart way to save for future medical expenses, but it's essential to know what qualifies. To start, you need a High Deductible Health Plan (HDHP) as it aligns with IRS regulations and allows you to access the benefits of an HSA.