Health Savings Accounts (HSAs)

A doctor discusses Health Savings Accounts (HSAs) with a patient in a medical office.
October 27, 2021

Primary Care Insurance Solutions offers expert guidance on Health Savings Accounts or HSAs, which put market forces to work to create a health-conscious community and drive down health costs for everyone. They create financial incentives to manage health care expenses by allowing tax-free contributions to accumulate and, if used for qualified medical expenses, are never taxed. As a plan option, HSAs are currently the number one way to bring down group health insurance costs by a factor of 30% or more.

What exactly is an HSA?

Health Savings Accounts (HSAs) are tax-free accounts in which funds accumulate to cover healthcare expenses. Their purpose is to empower individuals and decrease healthcare expenses by restoring control to consumers. There are two parts to an HSA: the Health Savings Account itself and a High Deductible Health Plan (HDHP). The combination of HSA/HDHP gives consumers a greater motivation to be cautious when selecting healthcare services. The combination of an HSA with an HDHP offers substantial benefits:

  • The monthly premiums for THDHPs are less expensive compared to conventional plans.
  • You can use tax-free dollars to purchase services, such as acupuncture and chiropractic services, that might not be covered on a traditional health insurance plan
  • An HSA is your account; if you switch jobs, the HSA goes with you.
  • HSA contributions can be rolled over from one year to the next; there is no “use it or lose it” requirement

To be eligible for an HSA, an employee must be covered by a high-deductible medical benefit plan, and must not be…

  • Covered by another health plan that is not a high deductible health plan (with certain exceptions)
  • Entitled to benefits under Medicare
  • Eligible to be claimed as a dependent on another person’s tax return

Self-employed individuals are also eligible to establish an HSA.

 

 

 

Frequently Asked Questions

What is the purpose of a Health Savings Account (HSA)?

The purpose of an HSA is to empower individuals to manage healthcare expenses by allowing tax-free contributions to accumulate, which if used for qualified medical expenses, are never taxed. This helps in creating a health-conscious community and driving down health costs for everyone.

What are the benefits of combining an HSA with a High Deductible Health Plan (HDHP)?

Combining an HSA with an HDHP offers several benefits:
– Lower monthly premiums compared to conventional plans.
– Ability to use tax-free dollars to purchase services, such as acupuncture and chiropractic services, which might not be covered by traditional health insurance plans.
– The HSA is your account and goes with you if you switch jobs.
– HSA contributions can be rolled over from one year to the next; there is no “use it or lose it” requirement.

Who is eligible for an HSA?

To be eligible for an HSA, an individual must be covered by a high-deductible medical benefit plan and must not be covered by another health plan that is not a high deductible health plan (with certain exceptions), entitled to benefits under Medicare, or eligible to be claimed as a dependent on another person’s tax return. Self-employed individuals are also eligible to establish an HSA.

Can I rollover my HSA contributions to the next year?

Yes, HSA contributions can be rolled over from one year to the next; there is no “use it or lose it” requirement.

Does the HSA go with me if I switch jobs?

Yes, the HSA is your account, and it goes with you if you switch jobs.
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