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Requirements for HSA Plan

The health savings account, also known as the HSA, grew out of the movement for more consumer-driven health care. By giving consumers more direct control over how they spend their health-care dollars, the government hoped to create an incentive to shop around, even when shopping for medications and health-care services. Not everyone, however, is eligible for an HSA account. To open an HSA and enjoy its benefits, you must meet a number of requirements.

  1. High-Deductible Health Plan

    • To qualify for an HSA, you must first have a high-deductible health plan, also known as an HDHP, in place. The HDHP must be in place prior to opening the HSA. You can purchase a high-deductible health plan on your own or get one directly from your employer. Be sure to check with your human resources department or your insurance broker to make sure your plan qualifies. If you're determined not to have an HDHP plan, the IRS could disallow the deduction you took for your HSA plan.

    Not Medicare-Eligible

    • If you're eligible for benefits under the Medicare plan, you can't open an HSA. This stipulation applies whether you're receiving Medicare as a result of reaching your 65th birthday or because you're receiving Social Security disability and Medicare benefits. If you have an HSA plan in place, you can continue to make your yearly contributions until you become eligible for Medicare benefits. Once you reach the age of 65, the money left in your HSA can be used for either medical or nonmedical expenses.

    No Dependent

    • If you can be claimed as a dependent on another person's return, such as a parent or legal guardian, you may not open or contribute to an HSA. Check with your tax preparer or the preparer your parents use to make sure you can't be claimed on their return.

    Supplemental Policies

    • If you have additional forms of health insurance that don't count as high-deductible health plans, you can't contribute to an HSA. Always check with your employer or the insurance company itself to verify your eligibility for an HSA. Verifying your eligibility before making your contribution is always preferable to having those contributions disallowed by the IRS.

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