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When coupled with a health savings account, a high deductible plan helps you save premiums and taxes - very cost efficient!

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How - and When - to Open an HSA Savings Account

One of the most common questions we hear is how to open the HSA savings account.

The first thing to consider is that there is a certain order in which things must be done. You are not eligible to open an HSA account until you are insured under an IRS-qualified high deductible health insurance plan. In other words, you cannot simply open up a health savings account without carrying health insurance. More specifically, the health insurance you carry must meet IRS rules that qualify it for HSA-eligibility.

Once you have an HSA-qualified health plan (HDHP) in place, then you are eligible to establish the actual savings account at the financial institution of your choice. We recommend that you keep your account separate from the insurance company in most situations.

You can open the account at any financial institution of your choice. Every bank or financial institution that is IRS-approved to handle IRA accounts is automatically approved to handle HSA accounts. Nevertheless, only a small percentage of those eligible institutions actually handle HSA accounts - probably due to the more limited market and the higher level of maintenance reporting required.

Setting up the HSA account is exactly like setting up an IRA account. In fact, the HSA account functions in a manner remarkably similar to the traditional IRA.

Just like an IRA, the HSA has some huge tax advantages. For example, every dollar you deposit into your savings account is fully deductible on your federal tax return, regardless of whether you itemize. Thus, every dollar going into the account is a tax-free dollar.

You can take the money back out on a tax-free basis to pay for a litany of approved medical expenses (this is way better than an IRA can do). For example, you can pay for virtually anything covered under your deductible on your HDHP like Rx drugs, routine doctor's visits, etc. In addition, you can pay for a lot of things that are not covered under the insurance policy, such as dental, vision, even accupuncture.

Click here to see a list of IRS-approved expenses for tax-free withdrawals

If you do not have a favorite financial institution of your own that handles HSA accounts, please click on our link to the right entitled HSA Administrators.

How to Get Started?

Easy. Get some quotes. None of these details matter much if you think the premiums are not low enough, or if you are not insurable. Use our easy form - it only takes about 3 minutes. Or better yet, call my office direct at 702.425.5250. I'll personally work up quotes for you and help you understand the advantages of establishing an HSA plan.