Qualifying for a health savings account

A: Congress built a “catch 22” into the law that allows us to pay for our out-of-pocket expenses tax free and build up a tax-free reserve for future medical expenses. The catch is two-pronged: 1) that we must be enrolled in a "qualifying" health insurance plan and 2) that we may not be enrolled in a "non-qualifying" health insurance plan. Unfortunately, the majority of health insurance plans in this country, including the high deductible health insurance plans, do not meet the IRS definition of a “qualifying” plan. That means that most people do not qualify for a health savings account. At last count there were 1.6 million people covered by health savings accounts. That is less than one half of one percent of all Americans. In short, this is a good government-endorsed program but a long way from being “mainstream” in the real world of health benefits. Fortunately there are a number of good alternatives available to most people that are as good or better than a health savings account. See the Frequently Asked Questions page at www.healthsavingsaccount-hsa.com for a more in-depth discussion of this topic. For those many people who do not qualify for a health savings account, an article discussing some tax-advantaged alternatives is also posted on this same Web site.