By In Health Financial Accounts, Health Savings Accounts (HSAs), High-Deductible Health Plan (HDHP), Individual Health Insurance

High Deductible ≠ HSA-Eligible

I saw an interesting question posted on Twitter this weekend that got me thinking about HSA eligibility. The question was about whether the new short-term, limited duration health plans being offered under a new expansion by the Trump Administration qualify as high-deductible health plans (HDHPs) and, as such, also qualify for health savings accounts (HSAs). I didn’t see that an answer was tracked down yet but the gist of the argument is that since HSAs are governed by the IRS and not Health and Human Services, which approves health insurance plan designs, then an STLD plan could also be an HDHP.

Why should this wonky distinction matter to you? Two reasons:

  1. In spite of my personal distaste for STLDs as meaningful health insurance, it’s good to know that you may be able to get an HSA attached to your STLD. I’ve embedded the Twitter thread at the bottom of this post so you can follow the answers.
  2. It’s important to note that you always need to confirm that your plan qualifies for a HSA, because a high deductible doesn’t automatically mean it does. The IRS rules have certain stipulations that make it hard to get any kind of pre-deductible expenses covered and still qualify as a “Consumer-Drive Health Plan” for purposes of HSA qualification. For example, there are a lot of plans on the individual marketplaces that have deductibles of anywhere from $5,000-$15,000. Yet since they offer some copay arrangements prior to your meeting your deductible, they are not considered HSA-eligible.

That’s a huge bummer but one that you’re responsible for knowing about. If you get an HDHP through your employer, chances are it is HSA-eligible, but you should still check your plan documents and/or speak to your HR manager to be sure. If you are shopping on the individual market or for an STLD plan, always read the fine print or ask your adviser point-blank if it qualifies. If it does, then awesome. If it doesn’t ask to see alternative plans that do qualify so that you can get a sense of what’s going to work for your budget and also give you that retirement savings vehicle.

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