Who is eligible to open up a health savings account?
First, let’s look at what health savings accounts are. A health savings account is a medical savings account in which contributions are made by yourself or your employer and are available for qualified medical expenses under IRS regulation. So now that we know what a health savings account is, let’s move on and discuss who is eligible for one.
- Anyone who has a high insurance deductible insurance plan.
- Anyone who is not covered by another insurance plan.
- A spouse of someone is eligible to use the funds within the health savings account as so long as that spouse is not covered under another insurance plan.
- Dependents that you claim on your income tax return are eligible to utilize the funds for their qualified medical expenses.
- Anyone who has an existing health savings account and changes jobs is eligible to port that account to roll over into another health savings account.
What makes someone ineligible?
Now that we have looked at who is eligible, let’s take a look at who may not be eligible for a health savings account.
- Anyone who is enrolled in Medicare is ineligible.
- A person who is claimed as a dependent on someone else’s tax return is ineligible.
- Anyone who is not enrolled in a high deductible health insurance plan is ineligible.
- Anyone who is enrolled in other insurance is ineligible.
Additional insurance coverage like dental, vision, disability, accident and long-term care are not considered “other insurance” under the IRS guidelines. So, what does the IRS consider “other insurance?”
Things to Know
What if a person is enrolled in a high deductible insurance plan and also has another type of plan like a health reimbursement account or a flexible spending account? That scenario makes an individual ineligible to enroll.
When considering if you are eligible to enroll, make sure you cannot be claimed as a dependent on someone else’s tax return, that the only other insurances you have besides your high deductible health insurance plan are ones that the IRS deems acceptable. If you are unsure, check with your tax advisor. Make sure that you are not enrolled in other accounts like a flexible spending account or health reimbursement account. Other than those considerations, being eligible for a health savings account is fairly straight forward.