A high-deductible health plan provides lower premiums and higher deductibles than a traditional health plan. An HSA can help pay for expenses that aren't covered by certain high-deductible insurance policies. Before opening an HSA, consult your employer or insurance provider to confirm your HSA eligibility.
To qualify for an HSA in 2021, a high-deductible health plan must have a deductible of at least $1,400 for self-only coverage and $2,800 for family coverage. Under the plan, maximum out-of-pocket expenses shouldn't exceed $7,000 for self-only coverage and $14,000 for family coverage.
You can make a contribution to your HSA each year. The contribution maximum is $3,600 for self-only coverage and $7,200 for family coverage. If you're 55 or older, you may be eligible to make a catch-up contribution.2
You can add funds to your HSA once or throughout the year, up to the IRS contribution limit. You can also receive contributions from any other person, such as a family member or employer. Your contributions may be tax deductible.2
Interest is compounded and credited to your account monthly.
Your HSA funds are inherited by your beneficiary, such as a spouse, family member or friend. A spouse can assume ownership of the account and use it for their own medical expenses. If the beneficiary isn't a spouse, the account isn't treated as an HSA and the funds get disbursed accordingly. If there isn't a named beneficiary, the funds get disbursed to an estate and are subject to applicable taxes.