• HSAs are a type of savings account that lets individuals set aside money on a pre-tax basis to pay for qualified medical expenses, such as deductibles, copayments, coinsurance, and some other expenses, but generally not premiums.
• Individuals may contribute to an HSA only if enrolled in a High Deductible Health Plan (HDHP) — generally a health plan that only covers “preventive services” before the deductible.
• HSA funds roll over year to year if not spent and an HSA may earn interest or other earnings, which are not taxable.

Health Savings Accounts (HSAs) are a type of savings account that lets individuals set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed HSA dollars to pay for deductibles, copayments, coinsurance, and some other expenses, the individual may be able to lower overall health care costs. HSA funds generally may not be used to pay premiums.

High deductible health plan requirement

While individuals can use the funds in an HSA at any time to pay for qualified medical expenses, the individual may contribute to an HSA only if enrolled in a High Deductible Health Plan (HDHP) — generally a health plan (including federal and state Marketplace plans) that only covers “preventive services” before the deductible.

“Preventive services” include, but aren’t limited to, the following:

• Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.
• Routine prenatal and well-child care.
• Child and adult immunizations.
• Tobacco cessation programs.
• Obesity weight-loss programs.
• Screening services.

For plan year 2023:

• The minimum deductible is $1,500 for an individual and $3,000 for a family.
• If enrolled in an HDHP, an individual can contribute up to $3,850 for self-only coverage and up to $7,750 for family coverage into an HSA.

HSA funds roll over year to year if not spent. An HSA may earn interest or other earnings, which are not taxable.

Some health insurance companies offer HSAs with HDHPs. Some banks and other financial institutions also offer HSAs.

Consolidated Appropriations Act, 2023 (CAA 2023)

The CAA 2023 extends for a second time the HSA relief permitting HDHPs to provide first-dollar telehealth and other remote care services for plan years beginning after December 31, 2022 and before January 1, 2025 (i.e., the 2023 and 2024 plan years for employers with a calendar plan year). Those telehealth or other remote care services do not need to be preventive or related to Covid-19 to qualify for the relief.

This CAA 2023 HSA relief is an extension of the CARES Act and CAA 2022 provisions, which provided the same telehealth relief for plan years beginning on or before December 31, 2021, and subsequently from April 2022 – December 2022.

The practical effect of the relief is that HDHPs may choose to waive the deductible for any telehealth services through 2024 without causing participants to lose HSA eligibility. The provision is optional—HDHPs are not required to waive the deductible that would otherwise apply to non-preventive telehealth services.