Health Savings Account (HSA)

If you are covered under a high deductible health plan (HDHP), are NOT covered under any other health plan, are NOT enrolled in Medicare, cannot be claimed as a dependent on someone else’s tax return, and have not been a recipient of veterans’ medical benefits in the previous three months, then you are eligible to establish an HSA.

Your health insurance provider would be able to tell you if you have an HSA-eligible HDHP. Your health plan is an HDHP if it meets certain requirements, which vary based on type of coverage you have (self-only or family).

Qualified medical expenses are medical expenses that are:

• Incurred on behalf of the HSA owner, their spouse, or dependents
• Incurred after an HSA has been established
• Not covered by insurance
• Paid by the HSA owner, their spouse, or dependents

As the HSA owner, you can take money out of your HSA at any time to pay for qualified medical expenses tax free, even if you are no longer an HSA eligible individual at the time of the distribution.

As the HSA owner, you are responsible for determining whether an expense is a qualified medical expense and therefore, a qualified distribution. You should also keep your receipts and maintain your records for any tax-free distributions you take from your HSA, in case you need to defend your expenditures or decisions during an IRS audit.

The maximum amount you can contribute to an HSA each year depends on:

• Whether or not you are eligible for a contribution, and if so, if you are eligible for a catch-up contribution
• What type of HDHP coverage the HSA owner carries throughout the year (self-only or family)
• How many months the HSA owner is covered by a qualified HDHP

Total contributions made by or on behalf of an HSA owner cannot exceed the annual contribution limit for the given year.