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What are Health Savings Accounts or HSAs?

HSAs are bank accounts, similar to an IRA (Individual Retirement Account), that allow you to save money and then spend money on healthcare expenses tax-free.  To open one of these accounts and to make contributions, you must be enrolled in a qualified high deductible health insurance plan.

Did you know?

• Money withdrawn from HSAs for medical expenses is not taxed, even if it is used to pay a spouse’s or dependant child’s medical expenses.
• Money withdrawn for non-medical expenses will be taxed and a 10% penalty assessed unless you are over age 65.
• Money saved in an HSA can continue being withdrawn even after the person is no longer covered by a qualified high deductible health insurance.

 

Helpful sources of information

Make sure that you understand HSAs and decide if they are right for you and your family.  The resources from commercial insurance companies used below are informational and not specific to that company’s products.

• U.S. Treasury Department : answers to frequently asked questions  & HSA Basics
• Acordia: Understanding the differences between HSAs and other types of accounts employers may offer
• Office of Insurance Commissioner: HSA Overview (see page 19)
• WAHA: worksheet to help you compare high-deductible health plans and HSA from different institutions
• IRS: What medical and dental expenses qualify to be paid tax-free out of an HSA (see pages 5-16)
• ACS Mellon:  Savings worksheet will help you guesstimate your healthcare spending under a traditional health insurance plan and an HSA/high deductible coverage combination
• IRS:  forms and information on reporting HSA contributions and withdrawals

I’m interested in HSAs.  What are my next steps?

1. Compare HSA bank account options.  This chart allows you to compare the features of 10 HSA accounts. Most are local banks. Other options may be available nationally.
   
2. Compare each qualified high deductible health insurance plan offered by the four insurance companies that cover residents of Whatcom County:
   • Group Health:  Coverage & Rates
   • Regence:  Coverage & Rates
   • Lifewise of Washington: Coverage & Rates
   • KPS Health Plans: Coverage & Rates
     
   • Easy Print Info: Coverage & Rates for all four companies (pdf) listed above (last updated February 2008)
3. Consider the pros and cons of an HSA in the short-term and long term
• Good for Some:  US General Accountability Office, August 2006 Report (pages 8,9,18,34)
• Cautions:  Families USA, July 2005 Fact Sheet
• Statistics: Center for Budget & Policy Priorities, June 2006 Article
• Highlights: Coalition for Affordable Healthcare, August 2005 Website