Health Savings Accounts (HSAs)
HSAs are tax-advantaged accounts that individuals can use to save for qualified medical expenses. Contributions to these accounts are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
To be eligible to open and contribute to an HSA, individuals must meet certain requirements, including:
Enrolled in a High Deductible Health Plan (HDHP): To be eligible to contribute to an HSA, an individual must be enrolled in a qualified HDHP. The 2023 minimum annual deductible is $1,500 for self-only HDHP coverage and $3,000 for family HDHP coverage.
Not enrolled in Medicare: Individuals who are enrolled in Medicare are not eligible to contribute to an HSA.
Not claimed as a dependent on someone else's tax return: If someone else claims you as a dependent on their tax return, you are not eligible to contribute to an HSA.
Under age 65: Individuals who are age 65 or older are not eligible to contribute to an HSA, but they can use the funds in an existing HSA to pay for qualified medical expenses tax-free.
Meet the annual contribution limit: In 2023, the annual contribution limit for an HSA is $3,850 for individuals and $7,750 for families.
Rules for HSAs can change from year to year, so it is important to check the current eligibility requirements and contribution limits before opening and contributing to an HSA. Additionally, the funds in an HSA must be used for qualified medical expenses, and there are penalties for using the funds for non-qualified expenses before age 65.