Health savings accounts (HSAs) are among the best ways to save on healthcare costs. They're versatile instruments that allow you to take advantage of numerous tax benefits while saving money for medical expenses and retirement. Discover if you qualify for an HSA! Explore our guide to HSA qualification criteria and start saving on healthcare with confidence. https://livelyme.com/blog/hsa-eligibility-requirements
There's a lot to love about HSAs, but not everyone can have one. To open an HSA, you must meet all HSA qualification requirements. In this blog, we'll cover those qualifications and what to do if you don't meet them.
How Does an HSA Work?
HSAs are special accounts designed to help you save and pay for qualified medical expenses. You can open one independently or through your employer. Either way, an HSA stays with you throughout your life as long as you meet eligibility requirements.
With an HSA, you can make contributions up to the annual amount. Those contributions are either pre-tax through your employer or tax-deductible if you do them through an administrator.
The funds in your HSA are also investable, paving the way to tax-deferred growth. When you need to use your HSA, all distributions are tax-free when used to pay for IRS-determined qualified medical expenses.
What are the HSA Qualification Requirements?
There are two primary requirements.
First, you must have a high-deductible health plan (HDHP). As the name implies, HDHPs have a higher annual deductible than standard insurance policies. To be HSA-eligible, they must also have a maximum limit on yearly deductibles, expense costs, copays and other out-of-pocket costs.
You can only get an HSA with an HDHP. You must enroll in an HDHP if you have a standard plan. The good news is that you won't lose an existing HSA if you switch to a non-HDHP policy. However, you can no longer make contributions.
The second qualification item is that you can't have coverage from other insurance policies. That means you can't be part of a spouse's family plan or have enrollment in Medicare. You'll also lose HSA eligibility if someone else is eligible to claim you as a dependent on their tax return.
Read a similar article about HSA companies here at this page.
