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Sometimes regular health insurance doesn’t cover all your health care needs. If you’re on a high-deductible plan, that’s more likely — and where health savings accounts might come in.

HSAs let you save up money specifically for health-related expenses, and more than 20 million Americans are taking advantage of this newer type of health management, America’s Health Insurance Plans (AHIP) says.


“HSAs give consumers more options and control over their health care — and that will help bring down costs,” says Marilyn Tavenner, president and CEO of AHIP. “HSAs give consumers the power to choose and the power to shop. With an HSA, consumers can look for the most cost-effective services and products that meet their individual needs. Not only do consumers save money, they can use these tax-free dollars to pay for them.”

As of January 2016, HSAs and high-deductible health plans (HDHPs) totaled 20.2 million enrollees. AHIP says most were preferred provider organizations, or PPOs, with 66 percent of enrollment. A decade earlier, in 2006, 3.2 million Americans were enrolled.

health savings account

What is an HSA?

Launched as part of the Medicare expansion program in 2003, HSAs were made to help consumers with higher deductible health insurance plans (deductibles are how much you pay out of pocket before your insurance kicks in). For lower-deductible plans, you pay more in your monthly premium. HSAs are not for lower-deductible insurance plan holders.

You can contribute to an HSA yourself or through your employer (or both!). They are made to pay for medical expenses that your health plan doesn’t cover. They can pay for LASIK eye surgery, nursing homes, tuition for children with disabilities, and vasectomies, among other things. You can technically spend HSA funds on anything, but if you spend it on things that don’t qualify, you may find yourself paying income tax on those expenses.

Can I get an HSA?

If you contribute to your HSA, it’s tax-free and can even earn a small amount of interest. This year, you (and anyone else, like your employer or family members) can contribute up to $3,400 for an individual plan and $6,750 for a family plan, AHIP says. If you’re older than 55, you can stash away an extra $1,000 a year as a “catch-up” contribution.

If your deductible is $1,300 or more ($2,600 for families), you qualify for an HSA. There’s also a limit for out-of-pocket expenses: $6,550 for individuals and $13,100 for families.

Many employers already offer HSAs through workplace health care options, but that doesn’t mean you are required to use that one. HSAs can be treated just like a savings account, and many banks and credit unions offer HSAs. Some have the option to set up a debit card for your account, while others will send you checks.

Even if you have a family health plan, each individual gets their own HSA. AHIP says most Americans who have health savings accounts were 45-64 years of age; But that doesn’t mean that’s the only group that can have them. Check with your employer to see if it’s offered through work, as well as an employer contribution, before exploring your options elsewhere.

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Meet the Author

Dori Zinn

Dori Zinn


Zinn is a freelance journalist based in Fort Lauderdale, Florida.

Budgeting & Saving, Family

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Article last modified on February 28, 2018 Published by, LLC . Mobile users may also access the AMP Version: Health Savings Accounts Hit Record Highs - AMP.