HSAs are like “medical” IRAs. They are tax-free accounts that individuals with an HSA compatible, high deductible health insurance policy can fund and use to pay for medical expenses. Because they are tax-advantaged and balances can accumulate over time, HSAs can also be used to accumulate savings.
To be eligible for an HSA, the accountholder must be covered only by an HSA compatible, high deductible health plan and must not be a dependent on another person’s tax return. Individuals age 65 and older are eligible to open an HSA as long as they have not elected Medicare Parts A, B, C or D. An HSA accountholder cannot have access to a general purpose healthcare FSA or HRA through their employer or their spouse’s employer.
HSA funds can be used to pay for a variety of healthcare services, including many that are not traditionally allowed under other plans. This includes some dental and vision care services, long term care insurance premiums, and medical insurance premiums during periods of unemployment. Visit our partner the HSA Store to view an up-to-date list of eligible products. More information is available in FAQs or in the Internal Revenue Service’s Publication 502, Medical and Dental Expenses.