Health Savings Accounts (HSA)
for Self-Employed

One of the most important issues for self-employed individuals is the expense of health care insurance.  One of the options to consider is high-deductible health coverage to keep the cost down and then setting up a Health Savings Account (HSA) to cover the deductible if and when you need to use your insurance coverage.

A Health Savings Account (HSA) is a tax-exempt trust or custodial account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary who, for the months for which contributions are made to an HSA, is covered under a high-deductible health plan.

An "eligible individual" means, any individual who:

• Is covered under a high-deductible health plan (HDHP).
• Is not also covered by any other health plan that is not an HDHP.
• Is not enrolled in Medicare (generally, has not yet reached age 65);
• May not be claimed as a dependent on another person's tax return.

As long as you meet the above requirements, you are eligible for a Health Savings Account (HSA).

A HDHP is a health plan that satisfies certain requirements with respect to deductibles and out-of-pocket expenses.  Specifically, for self-only coverage, an HDHP has an annual deductible of at least $1,050

 and annual out-of-pocket expenses required to be paid (deductibles, co-payments and other amounts, but not premiums) not exceeding $5,250.  For family coverage, an HDHP has an annual deductible of at least $2,100 and annual out-of-pocket expenses required to be paid not exceeding $10,500.

An individual does not fail to be eligible for an HSA merely because, in addition to an HDHP, the individual has coverage for any benefit provided by "permitted insurance." Permitted insurance is insurance under which substantially all of the coverage provided relates to liabilities incurred under workers' compensation laws, tort liabilities, liabilities relating to ownership or use of property (e.g., automobile insurance), insurance for a specified disease or illness, and insurance that pays a fixed amount per day (or other period) of hospitalization.