Health Savings Accounts (HSAs)

A health savings account (“HSA”) is a tax-deductible savings plan that you can contribute money to for healthcare expenses. This is similar to how a retirement saving plan works – the money that you put into the account is deducted from your income for tax purposes, thus enabling you to save money in a tax efficient way (for more on how this works and how it saves you money see “why is it important to deduct expenses from your taxes” in the tax expense section).

For 2021, you can deposit up to $3,600 into an HSA if you have an HDHP plan for just yourself, and up to $7,200 if your high deductible health plan (“HDHP”) covers one additional family member. If you’re enrolled in an HSA-qualified HDHP, then you can use this money to pay for qualified medical expenses like deductibles, copayments, and some other expenses (HSA funds usually can’t be used to pay premiums). Note that once the money is placed in an HSA it rolls over every year and can be used for healthcare expenses in the future even if you’re not enrolled in an HDHP plan anymore. Some people will use this to their benefit to save additional money to cover healthcare expenses in their retirement. 

For 2021, the minimum deductible to qualify as an HDHP plan is $1,400 for an individual and $2,800 for a family. When you view plans in the marketplace, you can usually see if they’re HSA eligible.