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Are There Income Limits on Who Can Participate in an HSA?

The U.S. doesn't have a federal government-sponsored health system. Individuals can invest in a tax-beneficial health savings account (HSA) to obtain health coverage.

  1. No Income Limits

    • To open an HSA account, it must be linked to a high-deductible (at least $1,200 for individuals or $2,400 for families) health insurance policy approved by the Internal Revenue Service. Unlike most tax deductions, there aren't any income limits imposed by the IRS, so anyone can open an account.

    Tax Benefits

    • Funds deposited into an HSA automatically qualify as a tax deduction against any earned gross income, by reducing your income for state and federal tax purposes. Lower-income individuals and families may benefit from additional tax breaks and credits. Anyone can harbor up to $5,450 from being classed as taxable income by the IRS.

    Low-income Earners

    • Consumer groups are concerned that HSAs disproportionately favor people in high tax brackets. They effectively claim 35 cents for every dollar deposited into an HSA, as opposed to 10 cents for people in the lowest income tax bracket. And very low income earners, who don't pay taxes, can't afford them and receive no tax subsidy.

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