To be eligible for an HSA, you must meet the following legal requirements:
- Be enrolled in a qualified high deductible health plan ("HDHP") - a health plan that typically offers a higher deductible but a lower premium and provides you with more flexibility in how you use your healthcare dollars
- Not be enrolled in a health insurance plan other than an HDHP or limited plan
- Not be claimed as a dependent on another person's tax return
- Not be enrolled for benefits under Part A or Part B of Medicare
In addition to the basic legal requirements, consider these questions as you determine whether an HSA is right for you:
- What are my estimated annual healthcare costs?
- What are my annual out-of-pocket expenses with my current health plan? For example, how much is my co-pay at the doctor's office or my co-pay for prescription medication?
- How much is my premium (the amount I pay each month to pay for my health insurance coverage)?
- How often do I spend money on healthcare?
- Do I have any upcoming events such as pregnancy, surgery,or retirement that will change my healthcare needs?
- Am I currently setting aside money for healthcare?
You can calculate your total annual healthcare costs with simple math:Total Healthcare cost per year = (Monthly premiums x 12) + Expected out-of-pocket costs
Once you have determined your total healthcare cost, compare it to the amount you need to accumulate to pay for your ongoing healthcare expenses. Remember that all contributions to your HSA will grow and stay with you year over year.