Setting up an HSA
Health savings account (HSA) requirements
To set up an HSA, make sure you meet these requirements:
- You must be covered by a high deductible health plan. Your Priority Health medical plan can be an HMO, POS or PPO as long as it has what qualifies as a "high" deductible. The government's definition of a high-deductible health plan changes each year.
- You can't be covered by any other medical plan or flexible spending account, unless it's a limited FSA. Your spouse or your children CAN be covered by another health plan.
- You can't be enrolled in Medicare Parts A, B or D.
- You can't be claimed as a dependent on anyone else's tax return.
- Your medical plan must limit your maximum out-of-pocket expenses. Most plans set them lower than the allowed maximum.
Setting up an HSA
- You set up a health savings account with your bank or financial institution or, if you have insurance through your employer, the one specified by your employer. The bank is responsible for tax reporting on your HSA and sends you statements showing deposits, withdrawals and balance.
- You'll use checks, a debit card or both to pay for your health care expenses.
- You, your employer (if applicable) or anyone else can put money into your HSA each year.
- If you contribute money through payroll deduction, it comes out of your paycheck tax-free.
- Funds in your HSA may earn tax-free interest, so even if you're not contributing to your account your HSA may continue to grow.
- Since you own your HSA, you can transfer it to a different bank or credit union if you change employers.
- If you change health plans and are no longer eligible for an HSA, different rules will apply, but the money remains yours and you can use it for qualified health care expenses.
- If you have Priority Health insurance through your employer, check with them about your HSA banking options.
- If you have a MyPriority plan and aren't sure who to use as your banking partner, we partner with a preferred banking partner called HealthEquity.
HSA contribution limits
The total amount you can put in your HSA each year is limited by the IRS. If you're over age 55, you may put in additional "catch-up" money. For 2018, the limit is $3,450 for singles and $6,900 for families.
It's important that you not exceed your contribution limit. Any amount of money that goes over what you're allowed by the IRS may be subject to tax penalties.