Are all high deductible plans hsa eligible

By Agatha Schmidt, CISP, SDIP, CHSP

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Are all high deductible health plans (HDHP) compatible with HSAs?
May a spouse, who is not the primary-insured individual of an HSA-compatible HDHP, open an HSA?
May adult children of an HSA-eligible individual open an HSA?
What if an HSA owner has secondary or supplemental insurance coverage?
May an individual contribute to an HSA if she is also covered by a Flexible Spending Account (FSA) or Health Reimbursement Account (HRA)?
What makes a high deductible health plan HSA qualified?
Which plans are HSA eligible?
What is not covered by HSA?

Are all high deductible health plans (HDHP) compatible with HSAs?

To make HSA contributions, an individual must be covered by a qualifying high deductible health plan (HDHP), and not be covered by a plan that is not an HDHP. Furthermore, when it comes to HSA contribution eligibility, not all HDHPs are created equal. Only certain HDHPs are compatible with HSAs; such HDHPs must meet certain minimum deductible and maximum out-of-pocket limits, which may change yearly because of cost-of-living adjustments. The limits for 2021 and 2022 are shown below.

May a spouse, who is not the primary-insured individual of an HSA-compatible HDHP, open an HSA?

Yes, as long as the spouse is also covered by the HDHP. If each spouse has an HSA, they must share the family contribution limit; they cannot each contribute the maximum amount for family coverage ($7,200 for 2021 and $7,300 for 2022). Spouses age 55 or older may each contribute up to $1,000 as a catch-up contribution to their own HSAs.

May adult children of an HSA-eligible individual open an HSA?

Possibly. The Patient Protection and Affordable Care Act of 2010 requires health plans that provide dependent coverage to make such coverage available to children until they reach age 26, even if the adult child is not eligible to be claimed as a dependent on the parent’s income tax return. Nondependent children, therefore, may be covered on their parents’ family HDHP, and if the parents are not eligible to claim them as dependents, such children could meet the eligibility requirements to open and contribute to HSAs. There is no official guidance indicating what the contribution limit would be for such individuals. But an IRS official commented to Ascensus that, assuming the nondependent child is otherwise HSA eligible, a separate family contribution limit ($7,200 for 2021 and $7,300 for 2022) would apply.

What if an HSA owner has secondary or supplemental insurance coverage?

To be eligible to contribute to an HSA, an individual must have HDHP coverage. The individual generally cannot be covered under a nonHDHP. There are, however, other types of coverage that individuals may have in addition to an HDHP—including coverage for accidents, disability, dental care, vision care, and long-term care. Certain “permitted insurance” is also allowed, such as insurance for a specified disease or illness, and insurance paying a fixed amount per day (or other period) for hospitalizations. For plan years beginning on or before December 31, 2021, insurance plans could have paid for telehealth and other remote care without first requiring an individual to satisfy a deductible.

May an individual contribute to an HSA if she is also covered by a Flexible Spending Account (FSA) or Health Reimbursement Account (HRA)?

An individual with HDHP coverage may be eligible to contribute to an HSA if she is also covered by a limited-purpose health FSA, a limited-purpose HRA, a post-deductible health FSA, or a post-deductible HRA. A limited-purpose health FSA or HRA only pays or reimburses permitted coverage benefits such as vision care, dental care, or preventive care. A post-deductible health FSA or HRA only pays or reimburses medical expenses related to preventive care or medical expenses incurred after the minimum annual HDHP deductible is satisfied. The post-deductible health FSA or HRA may not reimburse any medical expenses incurred before the annual HDHP deductible is satisfied, regardless of whether the HDHP covers the expense or whether the deductible is later satisfied. For more information on the interplay between HDHPs and FSA or HRA coverage for HSA eligibility purposes, see IRS Notice 2008-59.

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Bank of America, N.A. makes available The HSA for Life® Health Savings Account as a custodian only. The HSA for Life is intended to qualify as a Health Savings Account (HSA) as set forth in Internal Revenue Code section 223. However, the account beneficiary establishing the HSA is solely responsible for ensuring satisfaction of eligibility requirements set forth in IRC sec 223. If an individual/employee establishes a HSA and s/he is not otherwise eligible, s/he will be subject to adverse tax consequences. In addition, an employer making contributions to the HSA of an ineligible individual may also be subject to tax consequences. We recommend that applicants and employers contact qualified tax or legal counsel before establishing a HSA.

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The planning tools and information calculators are illustrative only, and accuracy is not guaranteed. They are intended to provide a comparative tool for various consumer health care options and potential costs and savings of those options. Bank of America and its affiliates are not tax or legal advisors. The calculators are not intended to offer any tax, legal or financial advice and do not assure the availability of or your eligibility for any specific product offered by Bank of America or its affiliates. Please consult with qualified professionals to discuss your situation. This site may contain links to third-party content, which may be articles, videos, or calculators, regarding health plans only as a convenience. Some articles, videos and calculators may have been written and produced by third parties not affiliated with Bank of America or any of its affiliates.

Neither Bank of America nor any of its affiliates or employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice.

If you have questions regarding your particular health care situation, please contact your health care, legal or tax advisor.

Please consult with your own attorney or tax advisor to understand the tax and legal consequences of establishing and maintaining a HSA, FSA, Dependent Care FSA, and/or HRA plan.

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What makes a high deductible health plan HSA qualified?

A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes. For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family.

Which plans are HSA eligible?

A health plan is generally considered compatible with an HSA if the annual deductible is at least $1,250 for individual coverage and $2,500 for family coverage. Out-of-pocket costs, to include deductibles and copayments, but not premiums, are limited to $6,350 for an individual and $12,700 for a family.

What is not covered by HSA?

Ineligible expenses for HSAs Cosmetic procedures, unless they correct a deformity or treat an underlying medical condition. Employment-related physical exams. Funeral expenses. Health insurance premiums, unless you have COBRA continuation coverage or receive unemployment benefits.