Explain Individual HSA Health Insurance Accounts

An individual health savings account (HSA) assists an individual in putting money aside for future medical expenses. The Internal Revenue Service sets different rules for individual HSAs than for family HSA plans.

Eligibility

To qualify for an individual HSA, you must have a high deductible health plan (HDHP). As of 2010, in order for a plan to qualify as an HDHP, the deductible must be at least $1,200 and the maximum annual out-of-pocket charges cannot exceed $5,950.

Benefits

Contributions made to your HSA can be deducted from your taxable income. The money in the account can be invested and grows tax-free. As long as the money is used for qualified medical expenses, the contributions and earnings come out tax-free.

Size

As of 2010, you can contribute up to $3,050 per year to your HSA.

Identification

Qualified medical expenses include preventative care, treatment and prescription drug costs. Elective medical procedures, such as most plastic surgeries, do not qualify.

References

• U.S. Treasury: HSA Brochure
• Wolters Kluwer: IRS Announces 2010 HSA Limits