Health Savings Accounts (HSAs)—High Deductible Health Plans

Health savings accounts (HSAs) are a popular type of tax-advantaged medical savings account available to individuals who are enrolled in high deductible health plans (HDHPs). Individuals can use their HSAs to pay for expenses that are covered under the HDHP until their deductible has been met, or they can use their HSAs to pay for qualified medical expenses that are not covered under the HDHP, such as dental or vision expenses.

Due to an HSA’s potential tax savings, federal tax law imposes strict eligibility requirements for HSA contributions. Among other eligibility requirements, an individual must be covered under an HDHP for the months for which contributions are made to his or her HSA.

To qualify as an HDHP, a health plan must provide significant benefits and satisfy requirements for minimum deductibles and out-of-pocket maximums. As a general rule, an HDHP cannot pay benefits until the required minimum deductible has been satisfied—except for preventive care benefits.