(This article was originally published on December 1, 2023, and reviewed and updated in November 2026. Tax rules, contribution limits, qualified expenses and account features may change. Review current federal guidance and contact InTouch Credit Union for current account information.)
Health Savings Accounts, or HSAs, offer a tax-advantaged way to save for certain medical expenses and are often paired with high-deductible health plans. The chief attractions include potential tax savings and the ability to carry unused funds from year to year. However, HSAs can be more complex than they first appear, so there are several questions to consider before opening one.
An HSA can help eligible individuals and families pay for qualified medical expenses now while setting aside money for future health care needs. To contribute to an HSA, you generally need to be enrolled in an HSA-eligible health plan and meet certain eligibility requirements.
How Does an HSA Work?
A Health Savings Account is designed to help eligible account holders save and pay for qualified medical expenses. The money is saved pre-tax (if your employer offers the option) or is eligible for tax deduction if you open the HSA at a financial institution. Unlike a regular savings account, any interest earned in the HSA is also not taxed.
While the specifics may change year to year, HSA funds may generally be used for qualified medical expenses such as:
- Eligible deductibles, copayments and coinsurance
- Prescriptions
- Certain over-the-counter health expenses
- Qualifying lab tests and X-rays
- Certain dental and vision expenses
- Emergency and ambulance services
Because not every health-related purchase qualifies, review the current IRS guidance or consult a qualified tax professional before using HSA funds for an unfamiliar expense.
ITCU Health Savings Account Option
InTouch Credit Union offers designated HSAs in both savings and checking formats.
What is an HSA Card?
An HSA card is a debit card connected to a Health Savings Account. It can be used to pay eligible medical expenses directly from the account. Because the account holder is responsible for confirming that each withdrawal is used for a qualified expense, it is a good idea to save receipts and other purchase records.
Do I Qualify for an HSA?
To contribute to an HSA, you generally must be enrolled in an HSA-eligible health plan and meet other eligibility requirements. Because HSA eligibility can also be affected by other health coverage and individual circumstances, review the current requirements before opening an account.
Before choosing a health plan, compare the premiums, deductible, covered care, maximum out-of-pocket costs and any employer HSA contributions. The right fit will depend on your household’s expected medical needs, budget and ability to manage possible expenses.
Above all, gather as much information about what your health plan covers and which expenses may qualify for HSA funds.
Is an HSA Right for my Family?
An HSA may be worth considering if your family is enrolled in an HSA-eligible health plan and the plan’s premiums, deductible and other out-of-pocket costs fit within your household budget. You may also benefit if your employer contributes to the account or if you want to set aside money specifically for current and future medical expenses.
Some additional points to consider include:
- Whether your family could comfortably cover the plan’s deductible
- How much you expect to spend on medical care during the year
- Whether your budget allows you to make regular HSA contributions
- Whether an employer will contribute to the account
- Whether the account’s fees and banking features meet your needs
- How much you value the ability to carry unused funds forward from year to year
An HSA may be less appealing if meeting the deductible would place too much strain on your budget or if another available health plan provides a better balance of premiums and expected medical costs. Other health coverage may also affect your eligibility to contribute, so review the requirements carefully before opening an account.
When comparing your options, look beyond the monthly premium or deductible alone. Consider the estimated annual cost of each health plan, including premiums, expected medical care, employer contributions, maximum out-of-pocket costs and the amount your household can comfortably contribute to an HSA.
If an HSA appears to fit your household’s health plan and budget, explore ITCU Health Savings Account options or contact an ITCU representative with questions about account features and opening requirements.