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Health savings accounts: Is an HSA right for you?
How much money can I deposit annually into a health savings account?
The Internal Revenue Service sets the contribution limits for HSAs. In recent years, the limits have been about $3,000 for individuals and about $6,000 for family coverage.
Can I use pretax money to fund a health savings account?
If your employer offers a high-deductible insurance plan, you may be able to deposit money into an HSA on a pretax basis. If you open an HSA on your own, you can deduct your deposits when you file your income taxes.
Can my employer contribute to my health savings account, too?
Yes, your employer can contribute to your HSA. But the total of your employer's contribution plus your contribution still must be within the contribution limits.
Are health savings accounts similar to flexible spending accounts?
Yes, but there are a couple of key differences. One difference is the ability to roll over unspent money each year. You can't do that with a flexible spending account (FSA).
Another difference is that the money you put into an HSA is yours and you can take it with you if you switch jobs or retire. You can't take money from an employer-sponsored FSA with you if you quit or change jobs. Finally, it's important to know that in most cases you can't have both an HSA and an FSA.
How do I find information about medical costs and quality so I can make informed choices?
It can be challenging. Right now it's difficult to get reliable information regarding the cost and quality of treatment options, doctors and hospitals. Your employer or health plan may offer some Web-based tools or a phone number to call for some basic information. The hope is that as health savings accounts and other consumer-directed health care options become more widespread, access to information about cost and quality will expand.
Can I withdraw money from a health savings account for nonmedical expenses?
Yes, but if you withdraw funds for nonmedical expenses before you turn 65, you have to pay taxes on the money and a 20 percent penalty. If you take money out after you turn 65, you don't have a penalty, but you must still pay taxes on the money.
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- FAQ on HSAs: The basics of health savings accounts. Kaiser Family Foundation. http://www.kaiserhealthnews.org/stories/2011/november/04/frequently-asked-questions-on-health-savings-accounts.aspx. Accessed Feb. 7, 2013.
- High deductible health plans. U.S. Bureau of Labor Statistics. http://www.bls.gov/opub/perspectives/program_perspectives_vol3_issue4.pdf. Accessed Feb. 7, 2013.
- Reed ME, et al. In consumer-directed health plans, a majority of patients were unaware of free or low-cost preventive care. Health Affairs. 2012;31:2641.
- Reed M, et al. Consumer-directed health plans with health savings accounts: Whose skin is in the game and how do costs affect care seeking? Medical Care. 2012;50:585.
- Consumer checklist: What to look for in a health insurance policy. U.S. Department of Health and Human Services. http://www.healthcare.gov/using-insurance/understanding/basics/index.html#ConsumerChecklist:WhattoLookforinaHealthInsurancePolicy. Accessed Feb. 7, 2013.
- HSA: Health savings accounts and the states. National Conference of State Legislatures. http://www.ncsl.org/issues-research/health/hsas-health-savings-accounts.aspx. Accessed Feb. 7, 2013.
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