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HSA Finance Options

Combining a high deductible health plan with a health savings account (HSA) is a good way to save money on both insurance premiums and taxes. High deductible health plans tend to have lower monthly premiums, and the money you put into the HSA is deductible on your tax return. You have a number of funding options when opening an HSA; and once the money is in the account, you can use it to pay for medical and health care expenses.

  1. Employer Funding

    • Many employers now offer a high deductible health plan option to their employees as a way to trim their costs and the cost to their workers. Some of those employers combine a company-funded health savings account to entice eligible employees to participate. In some cases the company funds the entire health savings account while others only fund part of the account and allow the employee to fund the rest through pre-tax payroll contributions.

    Personal Funding

    • If you do not have access to a health savings account where you work, you can open an account on your own, provided you have a high deductible health plan in place before you open the account. Many banks now offer health savings accounts, as do brokerage firms and mutual fund companies. Once the account is open, you can fund it with one lump sum contribution, or you can make a series of contributions throughout the year.

    Friends and Family

    • Anyone can contribute to a health savings account, including your family members and even your friends. That means parents and grandparents can contribute to a health savings account on behalf of their children and grandchildren. If your friends or family members do choose to make HSA contributions, you need to track those contributions carefully to make sure you do not exceed the limits set by the IRS.

    Contribution Limits

    • No matter who contributes to your health savings account, the total of those contributions cannot exceed the limits set by the IRS. The tax agency reviews the contribution limits for health savings accounts on an annual basis then adjusts them, as needed, using factors such as the rate of inflation. For 2011 the most that can be contributed to an individual health savings account is $3,050, and the most that can be contributed to a family HSA is $6,150.

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