Health Saving Account

What is a Health Savings Account (HSA)?

Think of an HSA as a “medical” IRA. A health savings account is a tax-advantaged account to be used for qualified medical expenses. Not only can you deduct your contributions to an IRA from your taxes, HSA funds can also be invested into a variety of investments to grow in value tax-free. Since inception in January 2004, HSAs are quickly gaining in popularity among individuals and employers alike.

What are the requirements for having an HSA?

  1. You must be enrolled in a high deductible qualified health plan (HDHP) with any carrier
  2. You cannot be claimed as a dependent on another person’s’ tax return
  3. You cannot be enrolled in Medicare
  4. You cannot have dual health insurance coverage (be covered by another non HSA qualified
    health plan.)

How much can be contributed to an HSA?

The 2023 IRS contribution limits are $3,850 for single plan coverage and $7,750 for family plan coverage. In 2024 the IRS contribution limits are increasing $300 for a single to $ 4,150 for a single plan coverage and $ 550 for a family to $8,300 for family plan coverage.

IRS Limits

2023 2024 Change
HSA Contribution limit
(employer + employee)
Self: $3,850
Family: $7,750
Self: $4,150
Family: $8,300
Self: + $300
Family: + $550
HSA catch up contributions
(age 55 or older)
$1,000 $1,000 No change
HDHP minimum deductibles Self: $1,500
Family: $3,000
Self: $1,600
Family: $3,200
Self: + $100
Family: + $200
HDHP maximum out-of-pocket
(deductibles, co-payments & all except premiums)
Self: $7,500
Family: $15,000
Self: $8,050
Family: $16,100
Self: +$550
Family: +$1,100


How do I fund the HSA?
You fund the HSA using federally tax-free dollars. If your employer allows, you can elect to have pre-tax contributions made via payroll deduction. You can also transfer funds online or send an “after tax” check and take the deduction as an above the line deduction on your federal income tax return 1040 when you file your taxes. Another option is to roll money over from an existing IRA.

As an individual policyholder, you would open up an HSA Account . To Find a suitable HSA Account please review this list

How can the funds be used?
The funds can be used for qualified health care expenses, including medical, dental and vision. Please see section 213 (d) for a full listing of qualified expenses. HSA funds can also be used to pay for COBRA premiums, Long Term Care premiums and Medicare premiums (Part B, C and D). All funds can be spent on eligible expenses for any IRS dependent, regardless of whether or not they are covered on the health plan. If funds are used for non-qualified expenses, a 20% IRS penalty applies.

What happens when I turn 65?

You can continue to use funds in an HSA for qualified medical expenses, paying Part B, Part D or if applicable Part C premiums, and for Long-Term Care premiums tax free. Another benefit for account holders 65 and over is that the HSA funds can also be spent on non-qualified expenses without a 10% penalty. Distributions for non-qualified expenses are taxed as “ordinary income”.

Stop making contributions to your HSA account 6 months before enrolling into Medicare, or you risk tax penalties.

Do I lose the funds if they are not spent at the end of each year?
No. Unlike other health care accounts like FSA’s, there is no “use it or lose it” provision with HSA’s. The funds in an HSA roll-over from year to year, are interest bearing, and are even portable if the account holder changes jobs or health insurance carriers. HSA’s are often viewed as additional retirement savings accounts for these reasons.

How do I pay for things?
Depending on the HSA bank, you can use a HSA debit card or checking book which you can use to purchase items that are qualified expenses. For example, at an in-network doctor’s office you will wait to be billed and then place your debit card numbers in the card options spot on the bill when you receive it. At the pharmacy, for dental, vision and out-of network doctors, you will also have the option of using your debit card at the time of service.

Do I have investment options for balances in my HSA?
Yes, you have full reign to self-direct the funds in your HSA account. However, it is recommended that you leave your deductible or better yet the out-of-pocket maximum amount liquid in your HSA managed account in case of a medical emergency.
Read also this good article about free HSA accounts.

Why would I choose an HSA?
HSAs are beneficial in many ways. Not only do account holders save money on health insurance premiums, but they are better able to take control over their health care choices and expenses. HSAs are the innovative financier of health care today and retirement tomorrow. Why spend more than you need to on premiums and taxes when you could be saving the money for yourself on a rich benefit PPO plan?

For additional information on HSA and our services, please contact us at 310-909-6135.

For additional information on HSAs and our services, please contact us at 310-909-6135.