Key Facts About HSAs & Eligibility
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  • 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.
  • A high deductible health insurance plan is one with an annual deductible of at least $1,300 for individuals and $2,600 for families.
  • HSAs are portable and move with the accountholder if there is a change in employment.
  • Unused HSA funds roll over from year to year and interest continues to grow on a tax-deferred basis.
  • HSA contributions can come from the accountholder, their employer or both, all in the same tax year. Each year the IRS changes the maximum annual contribution. For 2016 the maximum is $3,350 for individuals and $6,750 for families. Catch-up contributions can be made by individuals 55 and over up to $1,000.
  • Sterling allows HSA accountholders to self-direct HSA investments (subject to IRS limitations).
  • HSA funds can be used to pay for a variety of healthcare services, including many that are not traditionally allowed under other plans. For example, dental and vision care services, long term care insurance premiums and medical insurance premiums during periods of unemployment can all be paid for with HSA funds. More information is available in FAQs or in the Internal Revenue Service's Publication 502, Medical and Dental Expenses. HSA, HRA and FSA funds can no longer be used to purchase over-the-counter medications (such as aspirin, allergy and cold medications, etc.) without a written doctor's prescription. The pharmacist must fill prescriptions for these medications to be paid for with funds from your account using your account debit card at point of purchase. There are still many over-the-counter medical products that can be purchased without a doctor's prescription (such as contact lens solutions and diabetic test kits and supplies), so be sure to check before you purchase.