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HSA Purchase Guidelines

A health savings account is designed to help consumers pay for the high cost of medical care. The HSA is part of the consumer-driven health care initiatives that also include lower-cost high-deductible health plans. If you have access to a high-deductible plan, you could save money on premiums, and you could also save money on taxes by contributing to your HSA.

  1. The Right Health Plan

    • Not every consumer qualifies for a health savings account, and it is critical to make sure you can have one before you make any contributions. In order to qualify for an HSA, your current health insurance plan must be considered a high-deductible health plan, or HDHP. These plans have higher deductibles than normal plans, and the HSA contributions can offset those higher upfront costs. If you get your health insurance through your employer, you can check with your benefits manager to make sure your plan qualifies for an HSA. Contact your insurance broker, or the insurance company, if you bought your plan on the individual market.

    Health Care Spending

    • The purpose of the HSA is to help you pay for the cost of medical care. As a result, there is a limit on what you can use your HSA funds for. You can use your HSA funds to pay for medical expenses that are not reimbursed by your insurance company, such as co-payments for doctor visits or hospital stays, or the deductible for your plan. As of January 1, 2011, you can no longer use your HSA funds to pay for over-the-counter medications unless you first obtain a prescription from your doctor.

    Debit Card

    • When you open a health savings account, you should receive a special debit card you can use to access the funds in that account. This card is similar to any other debit card, and it even carries the Visa or Mastercard logo. However, you can only use this card to pay for purchases that are allowable under the HSA guidelines. If you use your debit card for any other purchase, you could be subject to a tax penalty from the IRS. When you use your debit card at a pharmacy, the store's software should flag any purchases that are not authorized, but it is still a good idea to buy only products you know are permitted under the HSA rules.

    Contribution Limits

    • The contribution limits for health savings accounts are set by the IRS, and the agency reviews those limits each year and adjusts them as necessary. For 2011, you can contribute up to $3,050 to a health savings account that covers only yourself. You can contribute up to $6,150 to the health savings account if it covers your entire family. If you are 55 years of age or older and not covered by Medicare, you can contribute an extra $1,000 to either an individual or a family plan.

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