HSAs can be used to lower your MAGI and qualify for better cost assistance on the Health Insurance Marketplace, this makes high deductible Silver plans very attractive.
We highly recommend using a Health Savings Account (HSA) if your plan has an annual deductible of more than $1,300 for self-only coverage or $2,600 for family coverage.
Health Savings Account Overview
All funds you put in your HSA are 100% tax deductible from gross income and can be used tax free to pay for out-of-pocket medical expenses, including dental and vision. There are limits to the amount of money you can put in tax free and the amount of money you can use tax free as well. Funds roll over year to year and can be used with Medicare after retirement. If you want to take money out of the account for non-medical reasons you must pay taxes and a 20% penalty.
Other Medical Savings Accounts include Flexible Spending Accounts (FSAs) and Archer Medical Savings Accounts (MSAs).
Who Should Use a Health Savings Account
Anyone with a high deductible plan can use a Heath Savings Account. HSAs can be used by individuals and families who buy private insurance and by employees and employers. Specifically your plan should state that it is a High Deductible Health Plan (HDHP) and is HSA eligible.
If you qualify for cost assistance on the Marketplace you can use an HSA to bring down your total Modified Adjusted Gross Income, as Health Savings Accounts and thus qualify for more subsidies. So you may want to consider a Silver HSA eligible plan.
HSAs and High Deductible Plans
You can only pair an HSA with a High Deductible Health Plan (HDHP). Your plan is considered a High Deductible plan if it has an annual deductible of more than $1,300 for self-only coverage or $2,600 for family coverage
High deductible health plan. For calendar year 2015, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,450 for self-only coverage or $12,900 for family coverage. IRS
