A Health Savings Account (HSA) is just like a personal savings account, but the money is only used for eligible health care expenses. A health saving account can be set up with you as the sole beneficiary, or for you as well as your spouse and/or dependents. HAS was established in 2003 as part of the Medicare Prescription Drug, Improvement and Modernization Act, Health Savings Accounts (HSAs) enable individuals with High-Deductible Health Plans to pay for present health care expenses and save for future expenses on a tax-favored basis. Here, we look at the pros and cons, eligibility requirements and other essential details about Health Savings Plans.



To be qualified for an HSA, you must be enrolled in a special health insurance plan known as a High-Deductible Health Plan or HDHP. Monthly premiums are usually much less for plans with lower deductibles while these plans have high deductibles, which make them interesting to people trying to diminish up-front costs associated with healthcare. HDHPs are planned to cover critical illness or injury, and with the exemption of preventive care (such as annual physicals, adult and child immunizations, as well as screening services), before any plan benefits are paid, your annual deductible must be met.


According to federal guiding principles, you can open and contribute to an HSA if you are:


  • Not covered by any other non-HDHP plan (with some exceptions for certain plans with limited coverage, such as dental, vision and disability).
  • Covered under an HDHP on the first day of the month.
  • Not enrolled in Medicare.
  • Not claimed as a dependent on someone else’s tax return


Below are the advantages of a Health Savings Account


Others can contribute to your HSA. Contributions can come from various sources, including you, your employer, a relative and anyone else who wants to add to your HSA. Health Savings Accounts offer a way to save for – and pay for – healthcare expenses. There are many advantages to having a Health Savings Account, including:


  • Pre-tax contributions. Contributions which are made through payroll deposits (through your employer) are usually made with pre-tax dollars, which means they are not subject to federal income taxes. In most states, contributions aren’t subject to state income taxes either. Your employer can make contributions on your behalf also, and the contribution is not included in your gross income.]
  • Tax-free withdrawals. Withdrawals from your HSA are not subject to federal (or in most cases, state) income taxes if they are used for qualified medical expenses.
  • Tax-deductible contributions. Contributions made with after-tax dollars can be deducted from your gross income on your tax return, which means you may owe less tax at the end of the year.
  • Earnings are tax-free. Any interest or other earnings on the assets in the account are tax-free.
  • Funds roll over. If you have money left in your HSA at the end of the year, it rolls over to the next year.
  • Portable. The money in your HSA stays accessible for future qualified medical expenses even if you change health insurance plans, retire or change employers. Funds left in your account continue to grow tax fee.
  • Convenient. Most HSAs issue a debit card so that you can pay for your prescription medication and other expenses right away. If you wait for a bill to come in the mail, you can give the billing center a call and make a payment over the phone making use of your debit card. And, you can use the card at an ATM to access cash.

Qualified Expenses

Hundreds of health expenses qualify for payment from an HSA. They are given explanations in detail in IRS Publication 502, Medical and Dental Expenses. The benefits of HAS are not limited to local treatments but patients can benefit for their treatment abroad. Many expenses in medical tourism including the treatment, travel expenses, accommodations, medications …etc are all payable and tax free with health savings account funds. MedicAbroad as the leading medical tourism company helps many patients with health savings account get their treatment abroad in best quality JCI accredited hospitals and worldwide renowned surgeons worldwide with a total cost up to 80% lower than it would cost in the USA. Countries like Mexico, Thailand, Turkey, Singapore, and Hungary are great options to consider for surgery abroad. Examples of eligible medical expenses include (but are not limited to):


  • Acupuncture
  • Ambulance services
  • Alcoholism treatment
  • Chiropractors
  • Dental treatments
  • Contact lens supplies
  • Diagnostic services
  • Doctor’s fees
  • Fertility services
  • Guide dogs
  • Hearing aids and batteries
  • Eye exams, glasses and surgery
  • Prescription medications
  • Hospital services
  • Insulin
  • Lab fees
  • Surgery
  • Nursing services
  • Psychiatric care
  • Telephone equipment for the visually or hearing impaired
  • Therapy or counseling
  • Wheelchairs
  • X-rays


Contribution Limits

Contributions to your Health Savings Account (HAS) can be made any time all through the calendar year and up to April 15 of following tax year. Regular contributions can be made by you all through the year, or make one lump-sum contribution when it’s fitting. The IRS sets contribution limits which determine how much you and/or your employer can contribute to your HSA every year. For 2014, the maximum contribution amounts are $3,300 for people and $6,550 for family coverage. You can add $900-$1,000 or more like a “catch-up” contribution if you are age 55 or probably older at the end of your tax year.


Setting up a Health Savings Account

Before you can sign up for a Health Savings Account, You must have an HDHP. Once you have an HDHP, you can get in touch with your health insurance company for details on setting up an HSA through its optional bank, or you can choose a financial institution on your own or through your employer’s human resources department. Your local bank or credit union may offer HSAs and can offer you enrollment information. Additionally, you can look online (try an Internet search for “HSA providers”). Once you select a bank, the registration procedure is relatively swift and includes completing an application and funding the account.


The Bottom Line

A Health Savings Account (HAS) can be a great option for individuals who are willing to limit their upfront healthcare costs while saving for future expenses. Health Saving Accounts (HSAs) go hand-in-hand with HDHPs; so generally, monthly premiums are considerably less than if you have a low deductible health plan. Also, encouraging tax treatment means you may owe less in taxes on your income tax return. What’s more, a Health Saving Account (HAS) may enable you to pay in pre-tax dollars for items your employer’s other insurance options do not cover, such as eyeglasses.


That said, HSAs are not perfect for everybody. If having a high deductible seems too uncertain to you – or if you expect having significant healthcare expenses – a plan with a lower deductible and lower co-pays might make more sense.


Before you make any decisions, it is always a good idea to compare your choices and take a close look at the cost elements (e.g., deductible, monthly premiums, co-pays, and coinsurance) associated with the different choices. In addition, compare a Health Savings Account (HAS) to a Flexible Spending Account, another way to make use of pre-tax dollars to pay for health expenses.

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