Health Savings Accounts or HSAs have been available under the Internal Revenue Code since 2004. They allow an individual or his employer to make tax deductible contributions to the account, which will then be used to pay medical expenses for the individual, when they occur.
To be eligible to take the deduction the individual must only be covered by a high deductible medical insurance plan, which for the 2014 tax year is $1,250.00 for an individual beneficiary and $2,500.00 for a family. The idea is to take advantage of the lower insurance premiums such policies will generate and put money into a savings account in case any medical expenses are incurred. Such plans seem to create the greatest benefit for healthy individuals.
As a bankruptcy lawyer I want to caution that a health savings account may not produce the same protection from creditors that other tax deferred savings plans do. I say may not, because it actually varies from state to state. Some states have passed statutes that allow the exemption for health savings accounts from creditor claims and others have not.
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