A health savings account is a wonderful way to save tax-free money to put toward healthcare expenses, but you may be wondering who can open a health savings account. After all, aren’t these things complicated and only for people who make a lot of money?
The truth is that you may be eligible to open a health savings account right now. In fact, many people are, but there are some rules regarding who can open a health savings account that you need to be aware of.
If you’re interested in learning more, consider the following:
Medicare
One way to exclude yourself from having a health savings account is by being enrolled in Medicare. Medicare is a government-sponsored health insurance program that is intended for seniors and some individuals with qualifying disabilities. You can’t have an HSA and participate in Medicare at the same time.
High-Deductible Health Insurance
You can contribute to an HSA if you have private insurance, but your plan must meet certain requirements regarding deductibles. Specifically, your plan must qualify as a high-deducible health plan (HDHP) as outlined by the Internal Revenue Service (IRS). The threshold for your deductible to qualify can change annually, so it’s a good idea to keep up with the latest standards.
Dependent Status
You may be ineligible for an HSA if you can be claimed as a dependent on someone else’s taxes. Special tax rules and classifications may apply to these situations, so you will want to consult with a tax advisor to know your limitations in this regard.
Are HSAs Only Available for Employees?
It’s also worth noting that there’s a common misconception that HSA access is only available through employer-sponsored plans. While most people access HSAs through their places of employment, you may be eligible to establish a private HSA through your bank or an investment firm. Each of these avenues comes with various limitations and restrictions, so you will want to consult with a representative from your institution to learn more.
Author Resource:-
Daniel Stewart has been helping people with their money management and personal finance with over 15 years’ experience in business finance. You can find his thoughts at health investment blog.
