Health Savings Account


A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.  No permission or authorization from the IRS is necessary to establish an HSA. When you set up an HSA, you will need to work with a qualified administrator, such as a trust company like CamaPlan, or a bank, insurance company, or another IRS-approved administrator of individual retirement arrangements (IRAs) or Archer MSAs. The trustee does not have to be your health plan provider.

Open an HSA

What are the Benefits of an HSA?

Several benefits accrue from having an HSA, including:

  • You can claim a tax deduction for contributions you, or someone other than your employer, make even if you do not itemize your deductions on Form 1040.
  • Contributions made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
  • The contributions remain in your account from year to year until you use them.
  • The interest or other earnings on the assets in the account are tax-free.
  • Distributions may be tax-free if you pay qualified medical expenses.
  • An HSA is “portable” – it stays with you if you change employers or leave the workforce.
  • Expenses can span several years. It is not a “use or lose”.

Qualifying for an HSA

To qualify for an HSA, you must meet the following requirements:

  • You must be covered under a High Deductible Health Plan (HDHP), on the first day of the month.
  • You have no other health coverage except coverage for:
    • Liabilities incurred under workers’ compensation laws, tort liabilities, or liabilities related to ownership or use of property
    • A specific disease or illness
    • A fixed amount per day (or other period) of hospitalization
    • Accidents
    • Disability
    • Dental care
    • Vision care
    • Long-term care
  • You are not enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else’s tax return.

If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided that policy does not cover you. Each spouse who is an eligible individual and wants an HSA must open a separate HSA. Two people cannot have a joint HSA.

You are considered to be eligible for the entire year if you are an eligible on the first day of the last month of your tax year (December 1 for most taxpayers).

If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. This is true even if the other person does not actually claim your exemption.


1.  Plans in which substantially all of the coverage is for the above listed exceptions are not HDHPs.

2.  You can have a prescription drug plan if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met.

3.  An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA.

Contributions to an HSA

Any eligible individual can contribute to an HSA. An employee, his or her employer, or both may contribute to the employee’s HSA in the same year. Self-employed or unemployed individuals can establish an HSA, and family members or any other person may also contribute on behalf of an eligible individual. All contributions to an HSA must be made in cash only.

More on Contribution Limits

When To Contribute

As with IRAs, you (and your employer) can make contributions to an HSA for one year until the filing deadline of the next year.

Enrolled in Medicare

Beginning with the first month you are enrolled in Medicare, your contribution limit is zero.

Qualified HSA Funding Distribution

A qualified HSA funding distribution may be made from your Traditional IRA or Roth IRA to your HSA, but not from an ongoing SEP IRA or SIMPLE IRA. A SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year in which the distribution would be made. The maximum amount that can be distributed depends on your HDHP coverage (self-only or family) on the first day of the month in which the contribution is made and your age as of the end of the tax year. The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. In general, you can make only one qualified HSA funding distribution during your lifetime and the total distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled.


You can rollover amounts from Archer MSAs and other HSAs into an HSA. You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Rollover contributions do not need to be in cash. Rollovers are not subject to the annual contribution limits, are not included in your income, are not deductible, and do not reduce your contribution limit.  You must roll over the amount within 60 days after the date of receipt, and you can make only one rollover contribution to an HSA during a 1-year period.  Direct transfers of funds from the trustee of one HSA account to the trustee of another HSA account are not considered a rollover and have no limitations on frequency.


The content provided on this page is for informational  purposes only and does not constitute a complete analysis of the rules governing the creation and use of a Health Savings Account. It is intended to provide an overview only of the benefits, eligibility requirements, and funding limitations of HSAs. For complete details regarding HSAs, including definitions of a High Deductible Health Plan (HDHP) and qualified medical expenses, refer to IRS Publication 969.