What is an HSA?
HSAs are best utilized with a high deductible base medical plan (required with HSA). HSA accounts are actual individual accounts, owned and controlled by the employee and are designed to be tools to help create awareness on the insured’s part as to the cost of medical services.
Features of an HSA
The HSA provides tax-free reimbursements for “first dollar” medical expenses.
Contributions can be made by the insured and/or in some cases their employer, but they belong to the insured. Therefore, these accounts are actually “pre-funded” and paid out of the insured’s own money.
Another important aspect are rollover and accumulation features. HSA accounts belong to the insured. Therefore, any amount in the account that is not used, stays in the account and rolls over to the next year.
Since HSAs are owned by the insured, many feel that they will do a much better job of creating an incentive for prudent medical expense spending.
In 2019, the funding limits (which are tax free) are $3,500 for individuals, and $7,000 for families.