FAQs for HSAs

How does an HSA work?

A Health Savings Account (HSA) is a tax-favored savings account that may be used in conjunction with a HSA-eligible high deductible health insurance plan to pay for qualifying medical expenses on a tax favored basis.  If you purchase health insurance that is HSA compatible (HSA eligible plans usually have HSA in their name) then you are allowed to also open up a HSA with a bank.  Contributions to your HSA are tax deductible on your Federal income tax return (not state.) Money in your HSA rolls over year to year and can be invested in many different types of investments such as passbook savings accounts, mutual funds, stocks, bonds, etc…The account grows tax free and you can take the money out tax free for most medical, dental, and vision expenses.

Contributions to an HSA may be made pre-tax, up to certain annual limits.

For 2013 the limits are $3,250 for a single person, and $6,450 for a family of two or more.

For 2014 the limits are $3,300 for a single person, and $6,550 for a family of two or more.

 


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Here at Santa Barbara Health Insurance Services we know that no web site can substitute for courteous service from an experienced professional. Our staff is always happy to help with your California health insurance, California dental insurance, or term life insurance needs. Feel free to call us any time at (800) 765-1540.