Health Savings Accounts (HSAs)
How Does An HSA Work?
To open an HSA, you must first obtain qualified health insurance with an annual deductible of $1,100 to $5,500 (single) or $2,200 to $11,000 (family). Then, you and/or your employer are allowed to make annual tax-deductible contributions to your HSA up to $2,850 (single) and $5,650 (family). These amounts are for 2007 and typically increase each year.
HSA Rules for Calendar Year 2006
| Single | Family | |
| Annual Deductible Range | $1,100 - $5,500 | $2,200 - $11,000 |
| Annual Contribution Limit | $2,850 | $5,650 |
You can obtain HSA-qualified health insurance either from your employer or by purchasing your own individual/family policy. When you choose a higher deductible health plan, you should expect to save at least as much on your annual premium as you may be spending out-of-pocket under the higher annual deductible plan.
$$$ TIP:
- If you now spend $5,000 a year for traditional low-deductible health insurance, raising your annual deductible by $2,000 could reduce your annual premium by $2,000 or more—saving you $2,000 to invest in your wellness or save for future medical expenses or retirement.
Your insurance carrier or employer will typically lower your premium this much for choosing high deductible insurance because it costs a carrier up to $50 in paperwork to process a typical $100 medical invoice—money the carrier will save if you pay your own medical bills up to your annual deductible.
Best of all, since you have control over the first $1,100 to $11,000 of your annual healthcare dollars, you can choose for yourself how this money is spent—or saved—on wellness, chiropractic, dental, or sickness care.