H.S.A. Health insurance plans and the Individual Health Savings Account

Key Benefit ConceptsActuarial, Services

H.S.A. Health insurance plans and the Individual Health Savings Account

An H.S.A. stands for Health Savings Account.  A health savings account is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.

There are several requirements that must be met to be eligible to open and fund an H.S.A. Account:

  1. You must be covered by an employer or individual health insurance plan that meets certain IRS requirements

In 2023 a health insurance plan that qualifies as an H.S.A. plan must have high deductible of at of at least $1,500 single or $3,000 family and a maximum out of pocket of no more than $7,500 single and $15,000 family.  The IRS adjusts these plan requirements each year and issues the new requirements in June that will be effective the following January. Besides these requirements, the HAS health plan must subject all expenses to the deductible except specifically identified preventive care services.  While the IRS does not mandate it, many health plans will charge an office copay and/or a prescription drug copay after the annual deductible is met.

  • You cannot be covered by a health plan that does not meet the High Deductible Health Plan (HDHP) status as noted in a. above. 

  • You can only make contributions if you are actively employed and not Medicare eligible. 

You can open and fund an H.S.A. account when you meet the above guidelines.  Once one of the requirements is no longer met, such as you are now enrolled in a low deductible plan or you become Medicare eligible, you can no longer make contributions to the H.S.A. account.  However, you can still use the H.S.A. dollars in the account for their intended purpose.

The government regulates the ability to fund an H.S.A. Account and how much can be funded annually, if eligible.  Just like the Plan Deductible and Out-of-Pocket are adjusted annually, so is the maximum contribution that can be made to the account.  Note too, that while your health plan may not be on a calendar year basis, the annual contribution limits are applied annually.