A. HSA has triple tax advantages, however, tracking down the right one may involve some hard work, we will help you go through the decision process below.
1. Decide HSA Eligibiity
To qualify for use with an HSA, the IRS says a plan must have a minimum annual deductible of $1,350 for individuals or $2,700 for families and a maximum annual deductible of $6,650 for individuals and $13,300 for families.
You cannot have any other health insurance coverage, be enrolled in Medicare or be covered by another plan, say through the spouse's plan. Also, you cannot be claimed as a dependent on someone else's tax return.
2. Determine Your Use of HSA
There are hundreds of financial institutions that offer HSAs, but not all are created equal. How you will use HSA will determine where you open an HSA.
If you plan to use it to pay current medical costs, fees should be the main concern. Features such as a debit card and easy online bill pay will be important.
If you plan to use HSA as an investment vehicle to pay for medical expenses in retirement, the focus will be the plan's investment menu, the management and fund fees.
3. Pick the Best HSA
An analysis by Morningstar from 2017 of the 10 largest HSA plan providers found that Alliant Credit Union, SelectAccount (now called Further), and HSA Authority were the best options for people using HA for current spending.
If you want to invest HSA savings, Morningstar recommended HealthEquity, Optum Bank, and HSA Authority.
What if you already have a HSA account elsewhere? We will discuss your options in next blogpost.