Written by
James D. Marosek, Jr., CPA

You may have heard of Health Savings Accounts or HSAs but you’re not really sure what they are. The benefit of an HSA is that you pay a much lower premium for health coverage, but you have to pay a higher deductible. You stand to benefit because any money not spent throughout the year on your deductible remains in your HSA and grows tax-free.

A Health Savings Account is a medical savings account that may be established by an individual or by an employer for the benefit of an employee. It works much like an Individual Retirement Account (IRA).

An HSA is established for the benefit of an individual
The HSA is owned by that individual
The HSA is portable

To qualify, an individual must be covered by a high deductible health plan (HDHP) and also not covered by any other health plan that is not a high deductible health plan. Generally, the HDHP must have an annual deductible of at least $1,000 for individual coverage or at least $2,000 for family coverage.

The annual contribution is limited to the annual deductible of the HDHP. It may be made in one or more payments throughout the year and up to April 15th of the following year. Any eligible individual may contribute. If an HSA is established by an employer than the employer, employee, or both may contribute to the HSA on behalf of the employee in a given year.

Any insurance company, bank, or person already approved by the IRS to be a trustee or custodian of an IRA or Archer MSA is automatically approved to be an HSA custodian. No permission or authorization is required from the IRS.

Please contact us if you have questions or need more information.