Finance Blog

Is a Health Savings Account (HSA) Right for Your Family?

Written by Miranda Marquit on August 16, 2013 in Family Money  |   2 comments

Health care and insurance costs continue to rise. To offset the ever-increasing price tag, some families are turning to a health savings account (HSA) to help them make the most of their health care dollars. With an HSA, it may be possible for you to…

Insurance, health insuranceHealth care and insurance costs continue to rise. To offset the ever-increasing price tag, some families are turning to a health savings account (HSA) to help them make the most of their health care dollars. With an HSA, it may be possible for you to offset some of the costs related to health insurance.

What is an HSA?

An HSA is a special savings account that allows you to save up for health care costs ahead of when you need to pay them.

Money you contribute to an HSA is tax-deductible, so you receive a benefit for your contribution. At the same time, the money grows in your account tax-free. As long as you withdraw money only for qualified health care expenses, you don’t have to pay taxes on the money or the earnings.

While many HSAs work similarly to regular savings accounts and have relatively low yields, it is possible to hold investments (including stocks and funds) in your HSA and avoid paying taxes on the earnings—as long as you use the money in the account for health care costs.

However, keep in mind that contribution limits are imposed on HSAs, and they are adjusted to keep in line with inflation each year.

Who can benefit from an HSA?

An HSA is not appropriate for all families, no matter how attractive that tax deduction—and the tax-free growth—sounds. While one preventative care visit each year is covered by your insurer, you will be responsible for paying for other office visits, along with prescription costs, lab tests, and other expenses

In addition, you are required to purchase a high-deductible plan in order to qualify for an HSA. Even though these types of plans have lower premiums, you will need to be prepared to pay more money up front until the deductible is reached. Many families using HSAs get around this by putting the savings they receive on their monthly premiums into the HSA. The HSA can then be used to pay for health care services and prescriptions.

My family benefits from our HSA because there are only three of us and our health care needs are few. We don’t get sick very often, and we only have a couple of monthly prescriptions. As a result, paying for most of our health care needs ourselves still costs less than what we were paying in insurance premiums prior to signing up for a high-deductible plan and HSA.

Other families might find that a high-deductible plan is costlier for them in the long run. If you have a chronic condition, or if you have a large family and make a number of health care visits a year, the out-of-pocket costs can really add up. By the time you hit your deductible, you could be in financial trouble.

Will an HSA work for your family?

Before you decide on an HSA, it’s important that you run the numbers. My family enjoys the tax deduction and the tax-free growth. Plus, if there is money remaining in the HSA when I reach age 59 ½, it will then act like a traditional IRA, and I will be able to withdraw money for non-medical expenses without penalty (but I’ll have to pay taxes on the amount withdrawn).

Do your research and consider your own situation to determine if you could benefit from an HSA. If you can handle the higher out-of-pocket expenses that come with a high-deductible plan, an HSA might be an option to consider.

Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the co-author of Community 101: How to Grow an Online Community, and the writer behind PlantingMoneySeeds.com.


  1. jgc says:

    How can I get an HSA??

Leave a Comment

Name :

Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.

Stay Informed Sign up for our FREE Equifax email Newsletter