How to Open a Health Savings Account
A health savings account, HSA, is a special account that is only used to pay medical expenses that are not covered by current health insurance. An HSA is recommened for those with very high deductibles or if no health insurance plan is offered by an employee. Finding an IRS approved bank or insurance company is the first step to opening your health savings account.
- Locate an insurance agency or bank that is IRS approved. The IRS must approve a bank or agency to be an HSA trustee. HSA accounts are tax exempt, up to a specified amount per year, by the IRS. This is because they are used for healthcare. A typical savings account will not qualify as an HSA.
- Phone the agency or bank and ask what will be needed to establish an HSA account. A current insurance card, social security numbers of all dependents, proof of name and address will be typically be needed. You may provide checking account information so the funds can be transferred to your HSA savings account electronically. The routing and account number will be needed for electronic withdrawals.
- Determine the beneficiary of the HSA account. You will need to have the beneficiary’s information handy as well. Gather the full legal name, address and social security number. You can name anyone you choose to be the beneficiary; it does not have to be a family member.
- Fund the account. Some employers will contribute to an employee's HSA account. Inform your employer that you have opened an HSA account and give them the necessary information. The IRS will not tax HSA accounts that do not exceed the amount allotted for HSA deposit. A tax will be assessed on any amount over the tax free allotment.