Health Savings Accounts (HSAs)
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HSAs allow you to pay for your current health care expenses and to save for future qualified health expenses on a tax-free basis. You, your family members, and your employer can make tax-deductible contributions to your account.
To open up an HSA account, you must have a High Deductible Health Plan (HDHP). You can use your HSA to pay the deductible on your HDHP and any other qualified expenses your plan does not cover, such as vision and dental fees, and over-the-counter drugs.
You make the decisions on how to spend the money in your account for qualified health expenses. You do not need approval from a third party or a health insurer. Any unused money in your account rolls over from year to year.
Who can set up a Health Savings Account
What qualifies as a High Deductible Health Plan (HDHP)
Where to go for more information
Who can set up a Health Savings Account
To establish an HSA, you must have a qualified High Deductible Health Plan (HDHP). You cannot have other health insurance. However, you may have auto, dental, vision, disability, and long-term care insurance that pays medical bills. If you are on Medicare or you received benefits from the Department of Veterans Affairs during the past three months, you cannot set up an HSA. Also, if you currently participate in an employer-sponsored HSA, you may not be eligible for a self-sponsored HSA. To find out if you qualify, check with your employer’s human resource department.
For 2009, the maximum amount you can deposit into an HSA is:
$3,000 for single coverage
$5,950 for family coverage
If you are age 55 or older, you can deposit additional money (also referred to as “catch-up” contributions) into your HSA account. The maximum annual catch-up contribution you can make is:
Year |
Catch-Up Amount |
| 2009 and after | $1,000 |
Contributions must stop once you enroll in Medicare.
What qualifies as a High Deductible Health Plan (HDHP)
A health plan qualifies as an HDHP if it has an annual deductible in 2009 of at least:
$1,150 for an individual’s (self) coverage
$2,300 for family coverage
- An HDHP also may include a preventive care benefit.
- The HDHP maximum annual out-of-pocket expense in 2009 is $5,800 for self-only coverage and $11,600 for family coverage.
- HDHPs in Washington state must comply with state insurance laws. If you have questions about an HDHP and whether it’s a valid plan, call our Insurance Consumer Hotline at 1-800-562-6900.
How HSAs work
Funds contributed to an HSA belong to the account beneficiary. If you change employers or leave the work force, they stay with you. Money can accumulate in the account every year and you can use any unused amounts in future years. Banks, credit unions, or life insurance companies usually administer HSAs. If you have questions or problems with your HSA administrator, contact the Internal Revenue Service at 1-800-829-1040 (TTY/TDD: 1-800-829-4059).
Where to go for more information
HSAs:
Contact your financial consultant or visit the U.S. Department of Treasury’s Web site at www.treas.gov (Click on “Health Savings Accounts”)
The Internal Revenue Service provides detailed questions and answers on HSAs.
Qualified health plans:
To find qualified health plans in Washington state that relate to HSAs, contact the Insurance Consumer Hotline at 1-800-562-6900 or read our publication, Shopping for Individual Health Care Coverage.
Qualified medical costs:
Internal Revenue publication 502, Medical and Dental Expenses defines qualified medical expenses.
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