To start a health savings account, find out if your employer offers an HSA option, or create your own account through a bank or another financial institution, instructs Mayo Clinic. Make sure you and your spouse using your insurance as secondary coverage have a high-deductible health insurance plan.
Individuals below 65 years old with no other insurance besides a high-deductible plan are eligible to set up a health savings account, states Mayo Clinic. You are still qualified if you have long-term care, disability, vision or dental insurance. If your employer set up an HSA for you, it can make contributions that do not exceed the contribution limits when combined with your own contribution.
A health savings account is a tax-free account that allows you to save up and pay for your health care expenses in the future, explains Mayo Clinic. Healthy people who want to prepare for future medical costs and those who are close to retirement typically open an HSA.
It is up to you to decide the amount of money to save in your HSA and how to use the money, notes Mayo Clinic. While your employer can add contributions, the account is solely yours even after changing jobs. The possible drawback of opening an HSA is the unpredictability of illnesses, making it tough to set aside an appropriate amount for medical expenses.