Health Savings Account
Health Savings Accounts (HSAs) are new, tax-favored consumer savings arrangements for individuals and families covered by high deductible insurance plans (IRC Sec. 223).
HSAs were created by the Medicare Prescription Drug and Modernizations Act of 2003 and became available January 1, 2004.
You can save money on current and future medical expenses. If you are eligible for an HSA, your contributions are tax deductible and your withdrawals for qualified expenses are tax-free.
Please note that a qualifying high deductible health plan does not have to be an employer sponsored arrangement. An individually issued insurance policy can also qualify if it otherwise meets the requirement.
Who is eligible to set up a Health Savings Account?
Individuals or employees who meet the following requirements on the first day of a month are eligible to set up and contribute to a Health Savings Account during that month.
- They must already be enrolled in or covered under a qualified high-deductible health plan on the first day of the month.
- They must not be able to be claimed as a dependent on anyone else's tax return
- They are currently not enrolled in Medicare