How to Establish an HSA Account

Health Savings Accounts (HSAs) are a vehicle for saving money for medical expenses. Contributions to HSAs are tax deductible. In addition, funds deposited in the account are allowed to grow tax deferred and can be withdrawn tax-free when used to pay for eligible medical expenses. In order to use a HSA, the account owner must have a qualifying high-deductible health insurance plan. Once set up, the account owner has full control over the funds inside the HSA account.

Step 1

Enroll in an eligible health insurance plan. HSA accounts are only available to people covered under a high deductible health plan. A high deductible plan is one that has a higher annual deductible than typical health plans and has a maximum out-of-pocket limit that the covered person must pay each year. Insurance companies typically identify which of their insurance plans meet these criteria.

Step 2

Ensure that you were not claimed as a dependent on someone else's tax return during the previous year. If someone else claimed you as a dependent, you are not eligible for a HSA during the following tax year. Persons enrolled in Medicare are not eligible for HSA accounts either.

Step 3

Select a trustee, or administrator, for your HSA funds. The insurance company itself does not provide HSA accounts (although some may do so through an affiliated financial company). HSA accounts may be opened with various financial institutions including, banks, credit unions, and brokerages. Check with financial companies you currently have an account with to see if they offer HSA accounts.

Step 4

Obtain account opening paperwork. As with all financial accounts, the person opening an HSA must provide certain legally required information such as name, address, date of birth, and Social Security Number or taxpayer ID number. Financial institutions are required to disclose all terms and conditions of the account, which you must acknowledge by signing a form. If the account is opened at an institution where there are already accounts in your name, such information can often be transferred from those accounts.

Step 5

Complete the forms to open the account and make a copy of the paperwork and keep for your records. Return the originals to the bank or brokerage.

Step 6

Fund the account. Contributions to the account are tax deductible in most cases, so retain all receipts and statements. Accounts may be funded by check, bank transfer, or wire.