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What Is a Health Savings Account? A Beginner's Guide

May 11th, 2022 | 4 min. read

What Is a Health Savings Account? A Beginner's Guide
Marika Sanchez

Marika Sanchez

Billing Coordinator // EW Motion Therapy

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Having enough money for medical expenses is a concern that many people have. It is unfortunate how money stress can impact a person’s ability to rest and recover from a procedure or an injury. If you have an ongoing medical condition, it might be wise to open a health savings account (HSA) if you qualify to set money aside for your medical expenses. But how do you know if you are eligible for an HSA? And should you even open one in the first place? 


It can be confusing to figure out how to budget for medical expenses, but if you qualify, an HSA can be a great way to budget out your money for healthcare. Some clients at EW Motion Therapy use an HSA to pay for their physical therapy and wellness services, and our billing staff is adept at handling all those transactions. Our ultimate goal is to ensure you are educated about all of your payment options for physical therapy, even if you choose not to seek treatment with us. 


This article discusses what an HSA is, what you can use the money for, the advantages and disadvantages of having one, and ways to open an account for yourself or a loved one. With this information, you can decide whether you want to open an HSA and feel confident in your decision.  


What is a HSA? 

In its simplest terms, a health savings account holds pre-taxed money that you can use for qualified medical expenses. You can deposit into this account straight from your paycheck, but you can only contribute a certain amount each year. HSAs are regulated by the government, and you can only qualify for an HSA if you have a high-deductible insurance plan (over $1400). 


If you do contribute money to an HSA, you can earn interest on those dollars, and the money carries over year to year. Additionally, if you create the account through your employer, you can take the money to a new account if you switch jobs, and you can take the money with you if you retire. 


What can you use a HSA for? 

You can use an HSA for qualified medical expenses, which the government defines and regulates. Qualified medical expenses are any costs associated with diagnosing, curing, mitigating, treating, or preventing disease or illness. This can include a myriad of items, including, but not limited to: surgical procedures, ambulance transportation, prosthetic limbs, breast pumps, guide dogs, and any medical supplies, like ibuprofen or bandages. 


You can only use the money in your HSA for these expenses. If you withdraw money from the account and try to use it for something else, you are fined and you must pay taxes on the money you took out. 


Advantages of using an HSA 

There are a few advantages to opening an HSA if you qualify. You can set aside pre-taxed money to pay for all your healthcare expenses for the entire year - talk about peace of mind. The money you put into that account is yours for life - you can directly manage your healthcare expenses and know exactly how your money is being used. It is also great to be able to earn interest on the money you put in, so your overall amount can grow over time, especially since you can carry the money over year after year. 


While an HSA might sound like a fantastic solution to budgeting for healthcare, you should consider a few potential disadvantages before you open your account.


Disadvantages of using an HSA 

It is always difficult to budget for the future, and that is one of the main reasons why HSAs might not always be the best solution. If a medical emergency happens, or you are diagnosed with a serious illness, you may not have enough money in your account to cover all of those medical bills. You cannot always predict the future, so it can be difficult to put enough in your HSA to cover all potential emergencies. 


Also, you are restricted to the government’s list of qualified medical expenses when it comes to spending the money in your HSA. Using money for non-medical financial emergencies will require you to navigate very specific rules and regulations. This is something to consider when you think about how much money you want to deposit.


How can I open a HSA?

Now you know a little more about HSAs and are maybe considering opening one for yourself and your family. Some employers offer HSAs like they offer 401ks and IRAs, so you should talk with your employer to find out. If your employer does not offer HSAs, there are many financial institutions that do, so contact the branch of your local bank or do a little more research to find a bank that has them in your area. Again, ensure you have the right kind of insurance plan to open an HSA before you contact your bank or your employer.


Money is always a primary concern in medical emergencies, but an HSA can give you some peace of mind knowing you have some money set aside. We do have patients at EW Motion Therapy that use HSAs, and both physical therapy and wellness services are covered under the government’s list of qualified medical expenses. If you are interested in our physical therapy or wellness services, fill out the Request an Appointment form on our website, and someone from our staff will contact you within 48 hours with your next steps.