Are you an expat in the United States? If so, you need to know about health saving account (HSA). Here’s what you need to know about health saving accounts and why they are a must-have for expats in the US.
(Please note that this is the information I have learned as an expat and they are subject to change so please do your OWN research).
1. What is a health saving account?
A health savings account (HSA) is a special type of savings account that helps you save money to pay for medical expenses. To be eligible for an HSA, you must have a high-deductible health plan. This means that your health insurance plan has a higher-than-average deductible. For 2023, according to the IRS, “For calendar year 2023, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,500 for self-only coverage or $3,000 for family coverage, and for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,500 for self-only coverage or $15,000 for family coverage.“
If you have a high deductible health plan, you can use an HSA to pay for your deductible, copayments, and coinsurance.
2. How does a health savings account work?
When you open an HSA, you contribute money to the account. The money in your HSA can be used to pay for qualifying medical expenses at any time. Your contributions are tax-deductible, and the money in your HSA grows tax-free. You can use your HSA to pay for health care expenses until you reach retirement age. After you retire, you can use your HSA to pay for health care costs not covered by Medicare.
3. Who is eligible for a health savings account?
To be eligible for an HSA, you must be enrolled in a high-deductible health plan (as defined above). You cannot be enrolled in a health plan that is not a high-deductible health plan, such as a health maintenance organization (HMO) or a preferred provider organization (PPO). You also cannot be enrolled in Medicare. In addition, you cannot have another health insurance plan that is not a high-deductible health plan. For example, if you have a health plan through your job and a health insurance policy that is not a high-deductible health plan, you are not eligible for an HSA.
4. How much can I contribute to a health savings account?
For 2023, the maximum contribution limit for an HSA is $3,850 for an individual with self-only coverage or $7,750 for an individual with family coverage. If you are age 55 or older, you can contribute an additional $1,000 to your HSA.
5. How do I use a health savings account?
To use your HSA, you simply need to present your health insurance card and HSA card at the time of service. The health care provider will then bill your health insurance company first and your HSA second. If you have enough money in your HSA to cover the entire bill, you will not have to pay anything out-of-pocket. If you do not have enough money in your HSA to cover the entire bill, you will only be responsible for paying the amount that is not covered by your health insurance or HSA.
6. What are the benefits of a health savings account?
There are many benefits of having an HSA, including:
– Tax savings: Your contributions to your HSA are tax-deductible, and the money in your HSA grows tax-free. This means no capital gain tax for your HSA investment gain (if any).
– Flexibility: You can use your HSA to pay for a wide range of qualifying medical expenses at any time.
– Savings for retirement: You can use your HSA to pay for health care costs not covered by Medicare when you retire.
7. Are there any drawbacks to having a health savings account?
There are a few potential drawbacks to having an HSA, including:
– High deductibles: You must have a high-deductible health plan to be eligible for an HSA. This means that you may have to pay more out-of-pocket costs before your health insurance plan kicks in.
– Contribution limits: There are limits on how much you can contribute to your HSA each year. If you have high health care costs, you may not be able to cover all of your expenses with your HSA.
Despite these potential drawbacks, HSAs can be a great way to save for health care costs. If you are eligible for an HSA, be sure to take advantage of the tax savings and flexibility that it offers.
8. How do I open a health savings account?
If you are eligible for an HSA, you can open one through a health insurance company, a bank or through the partner your employer is working with. There are many different HSA providers to choose from, so be sure to compare their fees and features before you decide on one. Once you have opened your HSA, you will need to fund it with contributions from your paycheck or from your own savings. You can start contributing to your HSA as soon as you enroll in a high-deductible health plan.
9. What happens to my health savings account if I change jobs?
If you change jobs, you can take your HSA with you. Your HSA is portable, meaning that it is not tied to your job. You can keep your HSA even if you leave your job or switch to a health plan that is not a high-deductible health plan.
10. Can I use my health savings account to pay for health insurance premiums?
Yes, you can use your HSA to pay for health insurance premiums, as well as other qualifying medical expenses. However, you can only use your HSA to pay for health insurance premiums if you are unemployed, between jobs, or if you are enrolled in a health insurance plan through the Marketplace.
Last but not least, I recently created a group on Facebook called Asian Expats in the US so that we can share/discuss more tips directly. Feel free to join.
That’s all from me. Let me know what you think via the comments below.