HSA Insurance Plans
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By Wiley Long III, President – HSA for America
Reviewed by Lou Spatafore – Fact checked by Misty Berryman – Updated 9/25/2024
HSA plans, also known as High Deductible Health Plans, can help you take control of your health and your money.
Lower your health insurance premiums
Make your medical expenses tax deductible
Cut your taxes by up to $2,200 per year
The Benefits of HSA Insurance Plans
1. How HSAs Work
A Health Savings Account is a tax-favored savings account combined with an insurance or healthshare plan. HSAs allow you to deposit tax-deductible funds into a savings account that you can use to cover medical costs.
To qualify you must have a high-deductible health insurance plan that qualifies to be partnered with an HSA. Money in the savings account can help pay the deductible. Once the deductible is met, the insurance starts paying. Money left in the savings account earns interest and is yours to keep.
2. Tax Deductible Contributions
Health savings accounts allow you to legally avoid federal income tax by saving up to $4,300 for singles or $8,550 for families in your HSA health plans account.*
Establish your HSA with the bank or HSA Administrator of your choice.
You will receive a federal income tax deduction for money deposited, even if you take the standard deduction and don’t itemize your deductions. This tax deduction is available to everyone with no limitations on the amount.
Most states also allow the same deduction for state income taxes.
A one-time roll-over from your IRA (Individual Retirement Account) or FSA (Flexible Spending Account) is even allowed!
If your employer makes an HSA contribution for you, it is “excluded” from income and not subject to any income tax or FICA. Either way, this will immediately reduce your federal income tax due for the year.
* Individuals age 55 and over may deposit into their account (and take a tax deduction on) an additional catch-up contribution of $1,000.
3. Tax-Subsidized Medical Expenses
HSAs allow you to spend the money in your account tax-free on qualified medical expenses, even if you have already received a tax deduction from the amount.
This includes any fees from going to the doctor, purchasing prescription drugs, or paying expenses towards your deductible. Once your deductible is met, the health insurance covers your medical expenses as defined in the policy.
In addition to these benefits, you can use your HSA account to cover other qualified expenses that would not normally be covered by a health insurance policy.
Also, your HSA can be used to pay these expenses for any spouse or dependent member of the family, including same sex and domestic partners, even if they are not covered under the insurance policy.
Premium and Tax Savings
Health Savings Accounts can help you save money on both your insurance premiums and your income taxes. Because HSAs must be paired with a high-deductible health plan and are sometimes paired with health sharing plans, your costs are often much lower than a typical plan.
The savings from the lower monthly costs along with the tax-free deductions could be $10,000 or more every year. Below is an example comparing how much a typical non-HSA plan might cost compared to an HSA plan set up within a health sharing program.
This example is based on the average health insurance premium of an individual with a family of four living in a metropolitan area, covered medical expenses totaling $2000 and $550 in expenses for dental care, contacts and eyeglasses.
Let’s see what a family could save with an HSA Plan
| Typical Non-HSA Plan $7500 Deductible: 80% / 20% Coinsurance | HSA Plan melded with a Health Sharing Program*, $1000 IUA (initial unshared amount) | |
| Annual Premium | - $16,812 | - $7,860 |
| Insured's Share of Medical Costs ($2,000 claim) | - $2,000 (full amount) | - $1000 (rest paid by healthshare) |
| Non-covered expenses: | - $550 | - $550 (dental and eye wear expenses) |
| Expenses Subtotal | = - $19,362 | = - $9,410 |
| Federal Tax Savings* | + $0 | + $1,752 |
| State Tax Savings* | + $0 | + $365 |
| Net Expenses (out-of-pocket minus savings) | - $19,362 | - $7,322 |
| Total (Net Savings with HSA Plan) | = +$12,040 in Savings! |
*A health sharing program is not health insurance, but rather a program that facilitates sharing of medical expenses among members. Go here to learn more about our health sharing program that can be paired with an HSA. If you are already a member of a healthshare, go here to learn about an HSA-qualified preventive plan that can be added to any healthshare, for as low as $85 a month.
HSA Insurance Q&As
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HSA-QUALIFIED HEALTH INSURANCE QUOTE
Health insurance plans that are HSA qualified can be viewed in our health insurance instant quote results. HSA-qualified plans will have a blue HSA symbol.
Choose your state below to get a free health insurance quote for both HSA-qualified and non-HSA health insurance plans.
HEALTH SHARING PLAN QUOTE
Health sharing plans are not insurance but a more affordable way to make sure your family is protected from unexpected medical expenses. Health sharing means that the group is helping to cover each other’s medical bills.
Choose your state below to get a free quote on our low-cost health sharing plan that will work with an HSA.
More details about how health savings accounts work can be found on our
HSA Frequently Asked Questions page.
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