3 Questions to Ask to Determine if an HSA is Right for You
By Sarah Brenner, JD
Director of Retirement Education
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The cost of healthcare continues to climb. Are you frustrated with higher premiums and out-of-pocket costs? You are not alone. You may be looking for new strategies to handle these expenses. If you have not considered a Health Savings Account (HSA) before, now may be the time. Here are 3 questions to ask to determine if an HSA is right for you.
1: Who is eligible to have HSA? To be eligible to make an HSA contribution, under the current rules you must be covered by a high deductible health plan (HDHP). The rules are very specific about what plans qualify. Here are the details for 2024:
| Year | Self-Only HDHP Minimum Deductible | Self-Only HDHP Maximum Out-of-Pocket Expenses | Family HDHP Minimum Deductible | Family HDHP Maximum Out-of-Pocket Expenses |
| 2024 | $1,600 | $8,050 | $3,200 | $16,100 |
If you have questions as to whether your plan qualifies, you should ask your employer or health insurance provider. You cannot contribute to an HSA once you are enrolled in Medicare. However, you can keep your existing HSA and you can still take tax-free distributions for qualified medical expenses.
2: How do the HSA contribution rules work? Your contribution limit will depend on your age and the type of health insurance you have. The HSA contribution limits are indexed for inflation. Here are the limits for 2024:
| Year | Self-Only HDHP under age 55 | Self-Only HDHP age 55+ | Family HDHP under age 55 | Family HDHP age 55+ |
| 2024 | $4,150 | $5,150 | $8,300 | $9,300 |
There are currently no income limits for HSA contributions, and you do not need to have earned income to contribute. If you make an HSA contribution, you may deduct that contribution regardless of how high your income is and regardless of whether you take the standard deduction or itemize deductions on your tax return.
3: How do the HSA distributions rules work? You can take tax-free distributions from your HSA for qualified medical expenses, including those of a spouse or dependent. This is true even if your spouse or child is not covered under the HSA compatible HDHP. You can take a tax-free distribution from an HSA to reimburse yourself for qualified medical expenses in prior years as long as the expenses were incurred after you established your HSA and you have proof of those expenses.