How To Open an HSA: Learn the Requirements & Options You Have When Opening an HSA Account
In this guide, I’ll show you how to open an HSA account and all the options you have to manage your account.
HSAs aren’t like ordinary bank accounts, only certain people qualify to contribute to them. To contribute to a health savings account, or HSA, you must first be covered under a qualified high deductible health plan, or HDHP. These are health insurance plans that are specially designed to work with HSAs.
For 2023, the minimum deductible amount for HDHPs is $1,500 for individual coverage and $3,000 for family coverage.
HDHPs also have a maximum out-of-pocket expense limit. That’s the amount of cost sharing that an individual or family would have to pay in covered health care expenses in any one year. As of 2023, the maximum out-of-pocket cost sharing is $7,500 for self-only coverage. and $15,000 for families.
Why contribute to a health savings account?
Those HDHP deductibles are high, of course. And the out-of-pocket risk is nothing to sneeze at. But households that contribute the maximum to a health savings account will have tax-free cash to spend on any qualified health care expense.
With a high-deductible health plan, in combination with a properly funded health savings account, you should be able to take unexpected medical expenses in stride.
Health savings accounts are the most tax-efficient, effective way to save for future out-of-pocket health care costs.
HSA eligibility – Am I allowed to Contribute to an HSA?
You can contribute to an HSA if you meet the following criteria, established by federal law:
- You’re covered under a qualifying high-deductible health plan.
- You’re not covered under any other medical plan, including your spouse’s plan
- You aren’t enrolled in Medicare, TRICARE, or TRICARE for Life
- You are not claimed on anyone else’s tax return as a dependent
- You aren’t receiving medical benefits from the Veterans Administration (Exception: If you have a service-connected disability and you enroll in an HDHP you can still contribute to an HSA).
- You don’t have other medical savings accounts, such as a flexible spending account (FSA) or a health reimbursement account (HRA).
Compare Pricing on the Best HSA Plans Available
How much can I contribute to an HSA?
For tax year 2023, eligible individuals can contribute up to $3,850. People with family plans can contribute up to $7,750. The IRS adjusts those numbers each year to account for the cost of living.
Can I open an HSA at any bank?
Not all banks offer HSAs. But If you’re otherwise eligible, you can open and contribute to an HSA at any bank you choose that offers them among their products.
To get you started, we’ve prepared a page listing some great options for HSA-administering banks.
Will an HSA affect my Obamacare subsidy?
Possibly. But in a good way. Here’s why: When you make contributions to a health savings plan, you lower the income they use to calculate any available subsidies. That means you’re showing a lower modified adjusted gross income on your tax returns.
This, in turn, may increase the amount of subsidy you get. The more you contribute to a health savings account or other tax-deferred savings vehicle, the greater the subsidy you may qualify for.
You may even qualify for an ACA where you didn’t qualify for one at all without contributing to a health savings account!
Can I use an HSA with a health sharing plan?
Yes. Although health sharing isn’t insurance, some health sharing plans have a health insurance component that provides all the minimum essential coverages required under the Affordable Care Act, and can therefore qualify as high deductible health plans under the law.
That means that once you’re enrolled, you can make tax-deductible contributions to an HSA – and make tax-free withdrawals from it to fund qualified health care expenses.
Combining an HDHP-qualified health sharing plan with a health savings account is a very potent money-saving strategy that still provides a lot of protection. Learn more about the HSA-qualified health sharing plan we offer.
Compare Pricing on the Best Healthshare Plans Available
Can I open an HSA without health insurance?
No. To make a tax-deductible contribution to an HSA, you must be enrolled in an HDHP, whether it’s through a qualified health sharing plan that offers the minimum essential coverage under the Affordable Care Act, or if it’s an HSA-qualified traditional health insurance plan.
What’s the deadline for contributing to an HSA?
You have until your tax filing deadline (without extensions) to make contributions to an HSA for that tax year. In most years, that’s April 15th. If there’s a weekend or holiday involved, tax day may be pushed 1-3 days later.
For example, for tax year 2022, you will be able to make contributions to your health savings account and get a tax deduction for your contributions until April 18th, 2023.
After that date, you can only make contributions and qualify for tax deductions for tax year 2023.
When must I join a High Deductible Health Plan?
To contribute to an HSA for the current tax year, you must be enrolled in a qualified HDHP not later than December 1st.
Can I set up HSAs for my workers as an employee benefit?
Yes, you can! In fact, many employers do precisely that: They offer an HDHP group health plan, which typically saves both the employer and employee significant money each year in premiums.
At the same time, employers can establish health savings accounts for employees, and contribute funds to them. So employees that have qualified health care expenses will have some cash available to help them cover the deductible.
Employer contributions are tax-free to the employee, and fully deductible to the employer as a business expense.
Read more here on How to set up a Small Business HSA, and request a quote for your business.
Note that to make contributions for the current tax year, you must have the health plans established and employees enrolled by December 1st.
How to open an HSA
You can open an HSA at any time, but you can’t contribute to one unless you’re enrolled in a high deductible health plan. To enroll, click here to contact a Personal Benefits Manager at HSA For America.
We’ll make it very easy for you to verify your eligibility, explore your options, and make sure you can select the very best plan for your situation and budget.
Then we’ll help you identify some good choices to act as your HSA custodian, and help you open your account.
While some insurance companies offer to administer your account (only if you have their insurance plan), you may also choose to work with an outside, third party administrator. For a comprehensive list of companies offering HSAs, complete with details on how each of these accounts work, please visit our HSA Administrator page.
The most popular HSA account administrator among our clients is HSA Bank. In addition to savings accounts, they offer full brokerage services with discount broker partners. This feature allows you to invest in stocks, bonds, and mutual funds through TD Ameritrade.
We have used them ourselves and have been very pleased with the level of customer service.
Low fees are an important consideration until you have built up some money in your account. If you are only interested in a savings account option, one of the HSA administrators that has low fees is First American Bank.
Christine Corsini works for HSA for America. As a PBM, her focus is to help people find money-saving alternatives like HSA plans and health sharing programs.