What is an HSA? It is a high-deductible health insurance policy paired with a Health Savings Account. As we are uncertain how these will be affected next January, the listing below is simply the current facts:
- What qualifies as a high deductible insurance policy? a minimum deductible of $1250 single / $2500 family.
- How much can I contribute to the pre-tax savings account? $3250 single / $6450 family per year.
- What can I use the money in the Savings account for? deductibles, copays, medical expenses, prescriptions.
- If I don't use all the money in the savings account within the year what happens to it? It continues to accumulate tax deferred and does not have to be used up like a flex spending account.
- How can the Savings Account portion be invested? lower balances will sit in cash, higher account balances can be invested in mutual funds.
- Who are these good for? Generally as a planner I don't recommend these for young families with kids (that tend to use medical services quite frequently). These work well for clients in their 40's and 50's that can put away more in pre-tax savings than they will use in medical services.