According to the IRS, "A Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA."
Who is a qualifying individual?
To be eligible for an HSA account:
- You must be covered under a High Deductible Health Plan (HDHP) on the first day of the month
- You are not enrolled in Medicare
- You have no other health coverage except what is permitted
- You cannot be claimed as a dependent on another person's 2020 tax return
Self-Only vs Family Plan
A self-only high deductible health plan (HDHP) is for the individual only. A family HDHP is for the individual and at least one other person.
How much can I contribute?
For tax year 2020, you are allowed to contribute the following amounts to an HSA:
- $3,550 for individual health plans
- $7,100 for family health plans
For tax year 2021, you are allowed to contribute the following amounts to an HSA:
- $3,600 for individual health plans
- $7,200 for family health plans
If enrolled in an HSA-eligible HDHP, and you are age 55 at any time in the calendar year, catch up contributions of $1,000 are permitted.
Family HSA Contribution Limit with Two HSA Accounts
Both the taxpayer and spouse are covered under the taxpayer's high-deductible health plan . The spouse decides they would like to take advantage of his/her employer’s HSA contributions and opens an HSA of their own. For tax year 2020, the total HSA contributions for both spouses cannot exceed $7,100.