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| A Health Savings Account (HSA) is a tax-favored account designed to pay for certain medical expenses and allows for a build up of savings to pay for future medical expenses. Coupled with a high deductible plan, HSA’s give individuals and/or employees a way to fund their health expenses now and save for retirement later. Section 1201 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L No. 108-173, added section 223 to the Internal Revenue Code to permit eligible individuals to establish Health Savings Accounts (HSA’s) for taxable years beginning after December 31, 2003. Click Here to see IRC 223.
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| Eligibility |
| An HSA is established by an “eligible individual” or by an employer for “eligible individuals” to be used for payment of qualified medical expenses. An “eligible individual” is one that is covered by an HSA eligible high deductible health plan, fall below Medicare eligibility age and who is not covered by any other health plan which provides the same benefits as the high deductible health plan. There are, however, certain “permitted” insurance plans in addition to the high deductible health plan. These include coverage for accidents, disability, dental, vision or long term care. |
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