What type of health plan must be in place to be eligible for contributions to a Health Savings Account (HSA)?

To be eligible for contributions to a Health Savings Account (HSA), an individual must be enrolled in a High Deductible Health Plan (HDHP). An HDHP is defined by specific minimum deductible amounts and maximum out-of-pocket expenses established by the IRS. These plans are designed to encourage individuals to take more responsibility for their healthcare costs while still providing them with significant coverage against large medical expenses.

The combination of a high deductible and the ability to contribute to an HSA allows individuals to pay for current health expenses and save for future qualified medical expenses on a tax-advantaged basis. Contributions to an HSA can be made by the account holder, their employer, or both, providing tax deductions for contributions and tax-free withdrawals for eligible medical expenses.

Other types of health plans, such as standard plans, PPOs, and EPOs, do not meet the specific requirements set forth by the IRS that govern HSAs, making them ineligible for HSA contributions.