Health savings accounts (HSAs)
An HSA is a tax-advantaged account that helps you pay for qualified medical expenses. You can have an HSA if you are enrolled in the CDHP or Local CDHP plans offered by the State Group Insurance Program. Read more below on how to make the most of your HSA.
What is an HSA?
An HSA is designed to work with a qualifying CDHP, or consumer-driven health plan (known as a Local CDHP/HSA for some plan members). The money goes in tax-free, grows income tax-free and comes out income tax-free when you use it for qualified medical expenses. You can carry over unused funds from year to year and the account is yours to keep even if you change jobs, change health plans or retire.
How an HSA works
The money goes into your HSA income tax-free on a payroll pretax basis, grows income tax-free and comes out income tax-free when you use it for qualified medical expenses. The account is yours to keep even if you change jobs, change health plans or retire. Also, you can carry over unused funds from year to year.
Check with your employer to see if payroll deduction into your HSA is provided; if not, you may make after-tax deposits to your HSA and take an above-the-line credit in order to reduce your tax liability when you file your tax return.
Who is eligible to open an HSA?
To be eligible for an HSA, you must meet the following requirements, as defined by the IRS:
- You must be covered under a qualifying high-deductible health plan (HDHP) on the first day of the month.
- You have no other health coverage except what is permitted by the IRS.
- You can’t be claimed as a dependent on someone else’s tax return.
- You are not enrolled in Medicare, TRICARE or TRICARE for Life.
- You haven’t received Veterans Affairs (VA) benefits within the past three months, except for preventive care. If you have a disability rating from the VA, this exclusion doesn’t apply.
- You do not qualify for a medical flexible spending account (FSA) if you are enrolled in the CDHP/HSA. You may, however, have a limited purpose FSA (L-FSA) for vision and dental expenses only.
Other restrictions and exceptions may also apply. We recommend that you consult a tax, legal or financial advisor to discuss your personal circumstances.
Getting started with your HSA
How to use your HSA
Learn more about fees and interest rates for your HSA.
Prepare for tax season and get answers to your questions about your taxes.
Learn about a fast and convenient way to pay for eligible and qualified medical expenses without submitting paper claim forms.
Investing your HSA
Built up your balance? You can choose to invest your HSA dollars.
View the standard investment options available as part of the HSA for employees.
Your HSA can be used as part of your broader financial planning to create a savings net.