HSA (Health Savings Account) is the IRS HDHP (High Ded Health Plan)

The Tax Break

• The HSA benefits anyone who currently pays taxes
• The Individual gets an above-the-line tax deduction for amounts contributed, up to certain limits (taxpayer does not have to itemize expenses to claim this deduction)
• Amounts in the HSA build up on a tax-deferred basis
• Distributions for qualified medical expenses are not taxed

Eligibility

• Who can have an HSA?
• In order to establish and contribute to an HSA, you must be an "eligible individual"
• Be a US Taxpayer
• Be covered by a qualified High-Deductible Health Plan (HDHP)
• Not be covered by a low-deductible plan (a non-HDHP) that provides coverage for any benefit that is covered by the HDHP prior to incurring the statutory minimum deductible

• Some non-HDHP coverage is still permissible:
• 1st Category: Coverage for accidents, disability, dental care, vision care, or long-term care
• 2nd Category: "Permitted Insurance" which means:

1.      Insurance, if substantially all of its coverage relates to liabilities under worker's compensation; tort liabilities; liabilities relating to ownership or use of property; or other similar liabilities as prescribed in future regulations

2.      Insurance for a specific disease or illness

3.      Insurance paying a fixed amount per day (or other period) of hospitalization

• Other conditions to being able to contribute to an HSA:

1.      Cannot contribute to an HSA if the individual can be claimed as a dependent on another person's tax return

2.      Cannot contribute to an HSA once the individual becomes entitled to Medicare benefits

Eligibility

•  What is a qualified HDHP?
• An HDHP is a comprehensive health plan with an annual deductible of at least $1,100 for self-only coverage and at least $2,200 for family coverage
• The IRS only considers two deductible levels - self-only, and family.
• The maximum annual out-of-pocket expenses (i.e., deductibles, co-pays, and other amounts besides premiums) for an HDHP must not exceed $5,500 for self-only coverage, or $11,000 for family coverage.
• In the case of a networked plan, these OOP maximums apply to in-network benefits only
• These amounts can be indexed for inflation.