An HSA is like a bank account that works with your health benefits and insurance plan. You use the money to pay for health care expenses. This might include the amount you may need to pay before your plan begins to pay – called a deductible – or for medical expenses not covered by your health plan, such as copays when you see a doctor.
You can put money into your HSA and, if you use it to pay for qualifying medical expenses, it’s all tax-free. And since there are no minimum balance requirements with an HSA, you’ll start earning interest right away.
There's no minimum contribution, but there is a limit to how much you can contribute each year. The federal government sets these limits. The easiest way to contribute to your HSA is through pre-tax payroll deductions at work. If your employer doesn’t offer this service, you can always make tax-deductible contributions yourself.
Because your health savings account has tax advantages, your tax return will need to show how you used your HSA dollars. Your HSA administrator will send you a report with the details you need. You also can download a history of your HSA deposits and withdrawals from your secure member website.
Here are a few tips on how to get the most out of it:
*HSAs are currently not available to HMO members in California and Illinois.