Health Saving Accounts and ObamaCare for 2017

We cover everything you need to know about Health Savings Accounts (HSAs) for 2017, including how HSAs work with ObamaCare plans.

What Are Health Savings Accounts?

Health savings accounts are tax-advantaged medical savings accounts that you can draw money from for certain medical expenses. They work a bit like a 401k, but money is tax-free in and tax-free out. They are very useful in this respect as they can drop your MAGI, help you pay fewer taxes, and help you qualify for more assistance.

However, they have some caveats too. Specifically, you can’t pay your premiums with an HSA, and like a 401k, you can lose money if you take risky bets so be cautious if you are going to invest your HSA funds.

One last note, to fund an HSA you need to have a High Deductible Health Plan (HDHP) that counts as Minimum Essential Coverage (MEC). So any marketplace plan with a high deductible after cost sharing assistance or any private major medical plan. Employer plans typically need to be paired with employer offered accounts. Medicare, Medicaid, CHIP, aren’t HSA eligible.

2017 HSA Minimums, Maximums, Contribution Limits, and More

For 2017 a Health Savings Account can be paired with any plan with an annual deductible of more than $1,300 for self-only coverage or $2,600 for family coverage, AKA any High Deductible Health Plan (the same was true for 2015 and 2016).

The 2017 HSA chart below shows several factors.  First, the minimum deductible, which is the minimum deductible your High Deductible Health Plan must have after cost assistance. Second, the maximum out-of-pocket cost. All ACA-compliant plans that are HSA eligible meet this criteria. The average person should focus on the minimum deductible because the maximums are being controlled by two different mechanisms. Third, the contribution limit, which is the total you can contribute in 2017 if you are under 55. Those 55 or older can contribute an extra $1,000, and this is shown in the fourth column.

HSA Chart for 2017

2017 Minimum Deductible Maximum Out-of-Pocket Contribution Limit 55+ Contribution
Single $1,300 $6,550 $3,400 +$1,000
Family $2,600 $13,100 $6,750 +$1,000
FACT: HSA’s aren’t “use it or lose it.” The money that you put in an HSA goes in tax-free. You can keep it, invest it, use it tax-free on medical expenses, withdraw funds from it at a fee, and roll it over into a retirement account when you are ready for Medicare. Only FSA’s, the kind of health savings account you get through your employer, are “use it or lose it.”
The IRS sets HSA limits each year, and the limits are then published in the Federal Register. This year HHS published the final rule of its 2017 ACA out-of-pocket limits in the Federal Register on March 8, 2016, in its Notice of Benefit and Payment Parameters for 2017. However, I suggest shrm.org for a more readable presentation of the HSA’s rules. For more details see our full page on Health Savings Accounts.