“My insurance company doesn’t offer a flexible spending account, but I just read that anyone can get a Health Savings Account. Is this true? If so, is there a criteria for deciding whether it would benefit me?” – R.H in Richmond
Dear R. H.,
Generally, if you are covered under a high-deductible health plan (HDHP) you are eligible to establish a health savings account (HSA). A qualifying HDHP has an annual deductible of at least $1,200 for individual coverage or $2,400 for family coverage and limits annual out-of-pocket expenses to $5,950 for individual coverage or $11,900 for family coverage.
You will not be eligible to open an HSA, even if you are covered under an HDHP, if any of the following apply:
- You are already covered under a non-HDHP, including a comprehensive major medical plan, a plan sponsored by your employer or your spouse’s employer, or a prescription drug plan or rider with a low deductible or no deductible.
- You can be claimed as a dependent on another person’s income tax return.
- You are entitled to Medicare coverage and have enrolled in Medicare.
In order to open a HAS on your own, you can establish one through any qualified trustee or custodian, including a bank, an insurance company, or a third-party administrator.
One of the advantages of HSAs is that unlike flexible spending accounts, HSAs do not have a “use it or lose it” provision. Funds remaining in your account at the end of the year are not forfeited and can continue to accumulate tax-free year after year until withdrawn. So, it will benefit anyone with qualified medical expenses, which pretty much covers all of us.
– Jennifer Luzzatto, CFA, CFP, NAPFA Registered Financial Advisor, 28-Nov-2010
Some information in this post was sourced from Broadridge
