Glossary of Tax Terms: HSA

In the tax world, the term “HSA” stands for “health savings account.”

An HSA allows you to save money, tax-advantaged, for medical expenses. Contributions to an HSA reduce your taxable income, and withdrawals from an HSA are tax-free if used for medical expenses.

Requirements

To qualify for an HSA, the basic requirements are:

  1. You must be covered under a high-deductible health plan (HDHP). For 2013, an HDHP is a plan that has a minimum annual deductible of $1,250 for single coverage and $2,500 for family coverage. The maximum annual deductible and out-of-pocket expenses is $6,250 for single coverage and $12,500 for family coverage.
  2. You generally cannot have any other health coverage, including Medicare
  3. You cannot participate in an HSA if you are eligible to be claimed as a dependent on someone else’s return, even if that person doesn’t actually claim you as a dependent.

For more information about HSAs, consult IRS Publication 969.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”