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What Is an HSA? What Is an HSA-compatible Health Plan?

What’s an HSA?

An HSA is a personal savings account that allows you to pay for qualified medical expenses with tax-advantaged dollars. You (and/or your employer) contribute money to an HSA through pre-tax or post-tax contributions. The money contributed to the account is not subject to federal income tax at the time of deposit. Funds in an HSA roll over and accumulate year after year if not spent. All money in your HSA is owned by you.

What is an HSA-compatible health plan?

HSA-compatible health plans are high-deductible health plans that often have lower rates than Blue Shield health plans that are not HSA-compatible. These high deductible plans can be used with an HSA to obtain tax advantages. To open an HSA you must enroll in an HSA-compatible health plan first.

What are the advantages of an HSA-compatible HDHP?

HSA-compatible High Deductible Health plans offer you:

  • Affordability - With higher deductibles, HSA-compatible health plans typically have lower rates than other Blue Shield PPO plans while still providing the quality benefits you need most.
  • Security - An HSA-compatible health plan offers the peace of mind that comes from having access to quality health care coverage.
  • Preventive benefits - All Blue Shield HSA-compatible health plans offer preventive care office visits with preferred providers at no charge before meeting the deductible.
  • Comprehensive drug benefits on most plans* - including $0 generic and brand-name coverage after meeting the deductible.

HSAs offer you:

  • Control - When you have an HSA, you make the decisions about:
    • How much money you put in your HSA
    • Which qualified expenses to pay, or whether to save the money
    • Which company will hold the account, unless your employer chooses your administrator 
    • How to invest the money in the account and which investments to make
  • Ownership - If you decide to open an HSA, you own the money in your HSA. It rolls over year after year like an IRA (Individual Retirement Account). There are no "use-it-or-lose-it" rules.
  • Deductions - Individual contributions to your HSA are allowed as a tax deduction, even if you don’t itemize your tax returns.
  • Flexibility - HSA funds can be used to pay for current medical expenses or saved to pay for future needs such as health plan or medical expenses, even after retirement.

*  Please see plan descriptions for detail.