Health Saving Accounts and ObamaCare for 2018

We cover everything you need to know about Health Savings Accounts (HSAs) for 2018, including how HSAs work with health plans under the Affordable Care Act.

TIP: The Affordable Care Act is sometimes called “ObamaCare” or the “ACA” for short. Thus, this page is about HSAs and how they work with ObamaCare / ACA plans. Learn more about the Affordable Care Act.

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 (household income after deductions), 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 with a 401k or IRA, 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.

2018 HSA Minimums, Maximums, Contribution Limits, and More

For 2018 a Health Savings Account can be paired with any plan with an annual deductible of more than $1,350 for self-only coverage or $2,700 for family coverage, AKA any High Deductible Health Plan (HDHP).[1][2]

The 2018 HSA chart below shows several figures pertaining to HSAs and health plans.

  1. The minimum deductible, which is the minimum deductible your High Deductible Health Plan must have after cost assistance.
  2. The maximum out-of-pocket cost.
  3. The contribution limit, which is the total you can contribute in 2018 if you are under 55. Those 55 or older can contribute an extra $1,000, and this is shown in the fourth column.

TIP: Not every ACA-compliant plan is HSA-eligible, so make sure you choose an HSA-eligible plan (the plan will be branded as such). For example, some higher end plans have deductibles too low to qualify and some catastrophic plans have deductibles too high to qualify (as the out-of-pocket maximum for HSAs is slightly lower than the maximum in general). Learn more about Maximums for 2018.

HSA Chart for 2018

2018 Minimum Deductible Maximum Out-of-Pocket Contribution Limit 55+ Contribution
Single $1,350 $6,650 $3,450 +$1,000
Family $2,700 $13,300 $6,900 +$1,000
TIP: All the figures have increased from last year. See the HSA chart chart from 2017 here.
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.”
NOTE: The IRS sets HSA limits each year, and the limits are then published in the Federal Register. This year the final numbers in Revenue Procedure 2017-37. With that noted, I suggest shrm.org for a well constructed presentation of each year’s HSA rules. For more details see our full page on Health Savings Accounts.
Citations

  1. IRS Sets 2018 HSA Contribution Limits Health savings account caps rise $50 for self-only plans, $150 for family coverage
  2. Rev. Proc. 2017-37 – Internal Revenue Service