As employers and providers seek to contain healthcare costs, they are increasingly placing more financial responsibility on patients in the form of high-deductible health plans, among other strategies.
Consumers enrolled in high-deductible health plans have the option of opening health savings accounts. Here are four key facts to know about HSAs, according to KeyBank and Wells Fargo.
1. Only people enrolled in high-deductible health plans can open HSAs. In 2013, to qualify for an HSA, consumers had to have health plans with a minimum deductible of at least $1,250 (self-only coverage) or $2,500 (family coverage). Additionally, to open an HSA in 2013, consumers couldn't have plans with annual out-of-pocket expenses exceeding $6,250 (self-only coverage) or $12,500 (family coverage).
2. HSAs allow consumers to pay for their current health expenses and save for future qualified medical expenses on a tax-free basis. The HSA balance and investment earnings carry over from year to year, according to Wells Fargo.
3. There is a limit to how much consumers can contribute to HSAs. For 2013, these limits were $3,250 for individual coverage and $6,450 for family coverage, according to KeyBank.
4. HSAs may only be used to pay for qualified medical expenses as determined by the Internal Revenue Service. The IRS defines qualified expenses as those pertaining to the "diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body." Qualified medical expenses include physicians' fees, hospital services and prescription drug costs.
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