A Health Savings Account (HSA) is an account that you can put money into to save for future medical expenses.
There are certain advantages to putting money into an HSA, including favorable tax treatment. A relatively new benefit plan, the HSA bill was signed into law by President Bush in December 2003.
Under an HSA, you can contribute if they meet specific enrollment criteria and are not enrolled in Medicare. Contributions to an HSA can be made by individuals, employers or both.
Who is Eligible to Establish a HSA?
An “eligible individual” is an individual, in any month, who:
- Is covered under a qualifying high-deductible health plan (HDHP);
- Is not also covered by any other health plan that is not a HDHP (with certain exceptions or plans providing limited coverage);
- Is not entitled to benefits under Medicare; and
- May not be claimed as a dependent on another person’s tax return
A supplemental insurance policy is required to cover catastrophic illness or injury expense in excess of the amounts deposited in the HSA.