Eligibility and Enrollment

Yes, you can have both an HSA and an IRA.

Although HSAs operate under many of the same rules that apply to traditional IRAs, an HSA is not an IRA; it is a tax-advantaged savings account for current and future qualified medical expenses. An HSA may be used to pay for non-medical expenses without penalty after you turn 65, so it can be used to save for retirement.

No. You are not eligible for an HSA if you are covered by any other health plan that is not a qualified HDHP.

Yes, as long as you haven't received any VA medical benefits during the preceding three months and you are currently enrolled in a qualified HDHP, you are allowed to open and contribute to an HSA. Beginning on January 1, 2016, there is an exception to this restriction. If your VA medical or hospital benefits are provided in connection with a service-connected disability you are eligible to open and contribute to an HSA as long as you are enrolled in a qualified HDHP regardless of when the VA benefits are received.

Yes. You are eligible to open and contribute to an HSA as long as you are not enrolled in benefits under Medicare and are covered by a qualified HDHP.

Yes. If you choose to be covered by the qualified HDHP, you may open and contribute to an HSA. It does not matter what options your employer offers. It matters only which option you elect.

Yes. As long as you are covered by a qualified HDHP you may also have other "permitted insurance" coverage. Permitted insurance includes:

  • Insurance for a specified disease or illness, such as cancer, diabetes, asthma or congestive heart failure or
  • Policies that provide coverage for accidents, disability, dental care, vision care or long-term care.

Many OTC items are eligible for purchase on a tax-free basis with your account, and they fall into three categories:

  1. Eligible - Insulin and health items that do not contain any medicine or drugs (bandages, contact lens solution, hearing aid batteries, diagnostic and testing products, reading glasses, etc) are eligible and do not require a prescription, letter of medical necessity or doctor's directive.
  2. Eligible with Prescription - Over-the-counter items that contain a drug or medication (cold and allergy medicine, pain relievers, sleep aids, etc.).
  3. Eligible with Letter of Medical Necessity or Doctor's Directive - Dual Purpose items can be used for a medical reason or for general health purposes and require a prescription, letter of medical necessity or doctor's directive. These items include products such as dietary, fiber and weight loss supplements, vitamins, orthopedic shoes and inserts, and snoring cessation aids.

Though you will not be required to submit the prescription or doctor's note, be sure to retain them for your tax records.

Yes. You may contribute for this year, provided you are covered by a qualified HDHP no later than December 1 and are eligible on that date.

If you enroll by December 1 of any year, you are eligible to contribute up to the annual maximum to your HSA as long as you continue to participate in a HDHP for the next 12 consecutive months (13 months in total). During this time, you cannot have other non-qualifying health care coverage.

For 2018, the maximum annual contribution you (and your employer) may contribute is $3,450 if you have single coverage, or up to $6,900 if you have family coverage. For 2019, the maximum annual contribution is $3,500 for individual coverage and $7,000 for family coverage. In addition, if you are 55 or older, you may add up to $1,000 in additional monies as part of a "catch up" contribution.

Your contribution for any given year depends on your enrollment in HDHP coverage by December 1 of that year and maintaining HDHP coverage during a testing period (i.e., the next 12 consecutive months, 13 months total). Account holders who fail to maintain the required coverage during the testing period must fill out Part 3 of Form 8889 to determine if there is an applicable penalty.

If you enroll in the HDHP, but end your coverage during the 12-month period, contributions to your HSA will be limited to a pro-rated share of the maximum annual contribution. The prorated contribution limit is based on your actual months of HDHP coverage.

For example: if you maintain HDHP coverage for six months (January through June), and the IRS maximum contribution limit for the year is $3,350, then your maximum contribution would be $1,675. [$3,350 divided by 12 times 6]. If you are 55, catch-up contributions are permitted and must also be pro-rated using the same formula.

The following types of coverage may make you ineligible for an HSA:

  • Medicare
  • Medicaid
  • Flexible Spending Arrangements (FSA)
  • Health Reimbursement Arrangements (HRA)
  • Coverage under a spouse's plan, including:
    • Low-deductible health insurance coverage
    • FSA or HRA coverage

No, only one person can be named the account owner.

Once an HSA owner becomes enrolled in Medicare, contributions to the account must stop. Generally this means at age 65. If, however, you become disabled and entitled to Medicare, contributions to the account must stop for the month in which you become enrolled.

If you can be claimed as a dependent on someone else's tax return, you are ineligible to open an HSA. Although this is not an age restriction, generally you cannot open an HSA for your child if you, or someone else, claims them as a dependent.

No. A general-purpose health FSA or HRA is other coverage that makes you ineligible to contribute to an HSA, because it is available to reimburse the qualified expenses of the employee and the employee's spouse and dependents. Consequently, if either you or your spouse participates in a general-purpose health FSA or HRA, neither of you will be eligible to contribute to an HSA.

No. There are no salary restrictions - minimum or maximum - that make you ineligible to open and contribute to an HSA.

No. You may open your HSA with any qualified financial institution, regardless of which insurance company provides your HDHP. However, you should check with your benefits department, as they may only provide contributions via payroll deduction with a specific HSA administrator.