HSAS + PLAN ELIGIBILITY

HSAs are like “medical” IRAs. They are tax-free accounts that individuals with an HSA compatible, high deductible health insurance policy can fund and use to pay for medical expenses. Because they are tax-advantaged and balances can accumulate over time, HSAs can also be used to accumulate savings.

ARE YOU ELIGIBLE?

To be eligible for an HSA, the accountholder must be covered only by an HSA compatible, high deductible health plan and must not be a dependent on another person’s tax return. Individuals age 65 and older are eligible to open an HSA as long as they have not elected Medicare Parts A, B, C or D. An HSA accountholder cannot have access to a general purpose healthcare FSA or HRA through their employer or their spouse’s employer.

  • A high deductible health insurance plan is one with an annual deductible of at least $1,350 for individuals and $2,700 for families.

HSA ADVANTAGES

  • HSAs are portable and move with the accountholder if there is a change in employment.
  • Unused HSA funds roll over from year to year and interest continues to grow on a tax-deferred basis.
  • HSA contributions can come from the accountholder, their employer or both, all in the same tax year. Each year the IRS changes the maximum annual contribution. For 2019 the maximum is $3,500 for individuals and $7,000 for families. Catch-up contributions can be made by individuals 55 and over up to $1,000. For 2020 the maximum is $3,550 for individuals and $7100 for families. Catch-up contributions remain at $1,000. 
  • Sterling allows HSA accountholders to self-direct HSA investments (subject to IRS limitations).

WHAT CAN HSA FUNDS BE USED FOR?

HSA funds can be used to pay for a variety of healthcare services, including many that are not traditionally allowed under other plans. This includes some dental and vision care services, long term care insurance premiums, and medical insurance premiums during periods of unemployment. Visit our partner the HSA Store to view an up-to-date list of eligible products. More information is available in FAQs or in the Internal Revenue Service’s Publication 502, Medical and Dental Expenses.