HSA-compatible health plans
What if you had a savings account to help cover health care costs — and the dollars rolled over from year to year? What if the money you spent on health care could help you save on taxes? That’s the power of a health savings account (HSA) paired with an HSA-compatible health plan.
How does it work?
Health savings accounts
An HSA allows you to contribute tax-deductible funds to save for future health care costs, gain tax-free interest on earnings and pay for IRS-qualified medical expenses tax free. You may be able to get an HSA through your preferred bank or credit union. If you want to take advantage of an HSA, you need to be enrolled in an HSA-compatible health plan.
HSA-compatible health plans
An HSA-compatible plan, sometimes called a high-deductible health plan (HDHP), has a lower monthly premium and higher deductible than a copay plan. The ability to save money for qualified medical expenses comes with the trade-off of paying more out of pocket before the health plan kicks in.
An HSA-compatible plan is available through UCare. You choose your network (broad or focused) and the level of coverage (bronze or silver) that works best for you. Just like the other UCare Individual & Family Plans, HSA-compatible health plans cover preventive care at 100% and cap your out-of-pocket expenses.
You aren’t required to open an HSA in order to enroll in an HSA-compatible plan, but it is a great option for saving money and paying for eligible medical expenses.
Save on taxes
- Deposit the 2025 maximum yearly amount ($4,300 for individuals and $8,550 for families) for the most savings
- Withdrawals are tax free when funds are used for eligible medical expenses
- Any interest you earn on your account is tax free
Is an HSA-compatible plan right for you?
This kind of health plan might be a good fit if you are generally healthy and don’t expect large health care expenses this year. It’s also a great option if you’re interested in actively managing your expenses and using your HSA as an investment tool.
If you think you and your family might need expensive health care in the next year, a copay plan may be a better option.
Never lose your HSA funds
Unlike a flexible spending account (FSA), you can keep funds you don’t use year after year. You can also invest the funds in your account and keep your earnings tax free. Talk to your financial planner or credit union rep about investing your HSA funds.
Once you enroll in Medicare, you can no longer contribute to an HSA. But you can continue to use the funds in your account to pay for qualified medical expenses. You can also use your HSA funds for other purposes after age 65, but you’ll pay income taxes for anything other than qualified medical expenses.
HSA FAQ
A health savings account (HSA) is a personal, pre-taxed savings account you can use to pay for some types of medical costs. When you pair an HSA with an HSA-compatible health plan, you get a flexible, tax-advantaged way to cover qualified medical expenses.
This is a health plan that allows you to spend funds from an HSA to cover IRS-qualified medical expenses. Funds in your HSA can be used to pay for medical expenses before and after you have met your health plan deductible — and even for procedures that aren’t covered under your health plan, like LASIK.
After your deductible is met, there is a percentage you will pay for covered services called coinsurance. You can use HSA funds for these expenses as well. Some plans, like UCare’s Bronze HSA, have 0% coinsurance. This means that once you meet the deductible, you also meet the maximum out-of-pocket limit and the health plan fully covers in-network services for the remainder of the plan year.
Typical HSA-compatible plans have these features:
- Lower monthly premiums than copay health plans
- Higher deductibles
- Fully covered preventive care that is available before you meet your deductible
To be eligible for an HSA, you must:
- Be enrolled in an HSA-compatible health plan (HDHP)
- Not be enrolled in Medicare, a general-purpose flexible spending account (FSA) or covered by another health plan that is not HSA-compatible
- Not be claimed as a dependent on someone else's tax return
Yes. An HSA-compatible plan covers in-network preventive services at 100% even if your deductible hasn’t been met.
Tax-deductible
Contributions to the HSA are deductible up to the annual limit — just like an IRA. As a result, they lower your taxable income.
Tax-free for medical care
Withdrawals to pay qualified medical expenses are never taxed.
Tax-free interest earnings
Interest earnings grow tax free.
You can withdraw HSA funds tax free to pay for IRS-qualified medical expenses. Common medical expenses include doctor, telehealth and online/virtual visits as well as lab fees, dental and vision care, prescriptions and over-the-counter medications. For a full list of IRS-qualified medical expenses, see irs.gov and search for “Publication 502, Medical and Dental Expenses.”
Yes, and interest on your account is tax free.
You can use your HSA funds as soon as you open an account and make a deposit. You are immediately fully vested and have full control over your HSA money.
If you are seen for services, your doctor will submit your claim to your health plan. If you haven’t met your deductible, you will be billed for those services (except preventive care, which is fully covered). You could then pay that bill using HSA funds. Keep your bills and payment receipts for tax purposes, and talk to a tax professional for help with any tax-related questions.
Yes. The limits are set by the IRS and updated each year to account for cost of living increases. For 2025, those limits are:
- Individual coverage: $4,300
- Family coverage: $8,550
If you're over 55, you can make catch-up contributions of $1,000 annually. You are responsible for making sure you don’t contribute more than the allowed amount. You can find up-to-date information at hsacenter.com.
You have up until the tax filing deadline of the following year to make contributions for the tax filing year.
No. You can deposit one lump sum or make smaller deposits throughout the year. However, your bank may require a minimum deposit or balance.
You’re in charge, but you can keep track by downloading “Publication 502, Medical and Dental Expenses,” a list of IRS qualified medical expenses, from irs.gov. It’s also a good idea to consult with your tax or financial advisor.
Yes, complete Form 8889 each year with your taxes to report total deposits and withdrawals from your account.
Yes. You should keep copies of your receipts for expenses paid with HSA money.
HSA funds roll over each year — there’s no "use it or lose it" rule.
If you do not already have an HSA, there are many banks and credit unions that offer them. You are free to choose any bank you like to open an HSA.
Note: This material is provided for general informational purposes only and should not be considered legal, tax or financial advice. You should consult with a lawyer, tax professional or other financial advisor to determine what may be best for your individual needs.