Health Savings Accounts

A Health Savings Account (HSA) is a tax-exempt account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary. In order to open a Health Savings Account (HSA), the eligible individual must be covered by a qualifying High Deductible Health Plan (HDHP). High Deductible Health Plans are available for both individual and family health insurance plans and for group health insurance plans.

A High Deductible Health Plan (HDHP) is a health plan that meets U.S. Treasury guidelines in terms of the annual plan deductible and annual out-of-pocket maximum. For 2007, a High Deductible Health Plan (HDHP) must have a minimum deductible of $1,100 for individual coverage, and a minimum deductible of $2,200 for family coverage. High Deductible Health Plans generally apply all medical costs to the annual deductible, so there are no co-pays for doctor visits or prescription drugs on these plans.

Funds deposited into a Health Savings Account can be used to pay for covered medical expenses in meeting the plan deductible, as well as for other qualified medical expenses not normally covered by the health plan (such as dental, vision, and other non-covered services). Contributions to the HSA are tax-deductible up to the IRS maximum; interest earned on the HSA funds is tax-free; and money in the Health Savings Account that is not spent is rolled over to use in following years. Withdrawals from the HSA for qualified medical expenses also are tax-free. The Health Savings Account is owned by the individual, so the account is portable and contributions cannot be taken away.

2007 Annual Contribution Levels for Health Savings Accounts*

• The maximum annual contribution for an individual with self-only
  coverage is $2,850.
• The maximum annual contribution for family coverage is $5,650.
• For individuals 55 or over, there is an additional "catch-up" contribution
  of $800 allowed.

*Health plan deductibles and Health Savings Account contribution maximums
are subject to annual change by the U.S. Treasury.

Insurance quotes that are run on our quote engine for individual and family plans will include options for qualifying HSA-compatible health plans.

Additional Resources

See a sample list of eligible medical expenses that can be paid from an HSA account.

Learn more about Health Savings Accounts (HSAs).