Finding Health Savings Accounts

Establishing a Health Savings Account (HSA) is similar to setting up an Individual Retirement Account (IRA). You do not need permission from the IRS or any other regulatory agency.

First you have to enroll in a qualified High-Deductible Health Plan (HDHP). Your Health Savings Account (HSA) administrator will require documentation of your enrollment in a HDHP.

If you terminate HDHP coverage, you can maintain your HSA, but you will not be eligible to make additional HSA contributions. If, at a later date, you re-enroll in an HDHP, you will be able to resume HSA contributions.

Combined HSA and HDHP Services

Some insurance companies, such as Fortis and Golden Rule, can provide the High-Deductible Health Plan (HDHP) and provide Health Savings Account (HSA) administration services. This conveniently allows you to complete a single set of application documents for both the HSA and HDHP. When you are approved for HDHP coverage, the insurance company automatically establishes your HSA.

Stand-Alone HSA Administration Services

If you prefer stand-alone Health Savings Account (HSA) administration, you will need to submit the proper enrollment forms, submit required payments and provide documentation of your enrollment in a qualified High-Deductible Health Plan (HDHP). The HSA administrator can provide you the correct forms.

HSA Enrollment Form

Some HSA administrators have electronic enrollment forms accessible through their websites, or they may present their enrollment forms in pdf format, which you can conveniently download and print. In comparing HSA administrators, you can learn a lot by reviewing the respective enrollment forms.

This website does not endorse or recommend specific HSA Administrators

Which HSA administrator is right for you? It depends on your unique circumstances and preferences.

Section 3(1) of the Employee Retirement Income Security Act of 1974 (ERISA) defines the term “employee welfare benefit plan” in relevant part to mean “any plan, fund, or program . . . established or maintained by an employer . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness . . . .”

Section 1201 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173 (the Medicare Modernization Act), added section 223 to the Internal Revenue Code (Code) to permit eligible individuals to establish Health Savings Accounts (HSAs).(1) In general, HSAs are established to receive tax-favored contributions by or on behalf of eligible individuals, and amounts in an HSA may be accumulated over the years or distributed on a tax-free basis to pay or reimburse “qualified medical expenses.”

In order to establish an HSA, an eligible individual, among other conditions, must be covered under a High Deductible Health Plan (HDHP).(2) Contributions to an HSA established by an eligible individual who is an employee may be made by the employee, the employee’s employer or both in a given year.(3) Amounts in an HSA may be rolled over to another HSA.(4) If an employer makes contributions to HSAs, the employer must make available a comparable contribution on behalf of all eligible employees with comparable coverage during the same period.(5) However, employers that make contributions to an employee’s HSA are not responsible for determining whether HSAs are used for qualified medical expenses or for investing or managing amounts contributed to an employee’s HSA.(6)

HSAs are personal health care savings vehicles rather than a form of group health insurance. For example, funds deposited in an HSA generally may not be used to pay health insurance premiums,(8) and the beneficiaries of the account have sole control and are exclusively responsible for expending the funds in compliance with the requirements of the Code. Because of these differences, we regard court precedent on the significance of employer contributions to group or group-type insurance arrangements as inapposite to HSAs. In the group health insurance context, the employer, whether by choosing an insurance policy or creating a self-funded program, typically establishes the type of benefits provided, the conditions for their receipt, and the manner in which claims will be adjudicated. In the context of HSAs, however, the employer may be doing little more than contributing funds to an account controlled solely by the employee.

Accordingly, employer contributions to HSAs give rise to an ERISA-covered plan where the establishment of the HSAs is completely voluntary on the part of the employees and the employer does not: (i) limit the ability of eligible individuals to move their funds to another HSA beyond restrictions imposed by the Code; (ii) impose conditions on utilization of HSA funds beyond those permitted under the Code; (iii) make or influence the investment decisions with respect to funds contributed to an HSA; (iv) represent that the HSAs are an employee welfare benefit plan established or maintained by the employer; or (v) receive any payment or compensation in connection with an HSA.

 

The difference between MSAs and HSAs

Have HSAs been a success?

 

Economists at Brigham Young University developed a mathematical model of user choice and possible implications on policy. Their model shows HSAs can result in a case where both sick and healthy people are better off.

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