Health Insurance

Want Lasik or IVF? Get a Health Savings Account (HSA) First

Want Lasik or IVF? Get a Health Savings Account (HSA) First

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A health savings account can save you lots of money on health, dental, vision, hearing and disability expenses that aren't covered by your insurance. These accounts, which are designed to offset the costs associated with high-deductible health plans, allow you to use untaxed money for uninsured medical expenses. You may have heard about the intriguing benefits of Health Savings Accounts, and have HSA-eligible plans among your options.


Health savings accounts offer some nice perks if you expect to have health, dental, vision, hearing or disability expenses that aren’t covered by insurance. Just like a flexible spending account (FSA, the employer-sponsored version, which has slightly different rules), an HSA allows you to pay for things like laser eye surgery, fertility treatments, even dental care, with pre-tax dollars. This can save you between 10% and 50% on each expenditure, depending on your tax rate.

Here are some examples of typical procedures, and the amount of savings consumers can see at various tax rates.

Health Expense

Typical Cost
Tax Rate*
Pay with HSA**
Equivalent Pre-Tax Dollars
Savings Using HSA

A Root Canal


Lasik, both eyes


Child's Braces


A Round of IVF

  • Tax rate includes the employee's portion of the Social Security and Medicare tax, state income tax and federal income tax. Rates vary by income and location.

**This table assumes the HSA is established by the individual, not as a cafeteria plan through an employer. As a result, you would still pay the employee portion of the Social Security and Medicare tax at a rate of 7.65%.

What can you pay for with an HSA?

You can use HSA money to pay for expenses like your health insurance deductible, co-pays for doctor visits or prescription medications and co-insurance for imaging or procedures.

But you can also use the money to pay for other kinds of health-related expenses that may not be covered by your health insurance at all. Similar to the rules for FSAs, if you have an HSA, you can use the money in the account to pay for almost any expense that would qualify as a deductible medical or dental expense under IRS rules. The following table includes a sampling of the costs you can pay for out of your HSA.

HSA-Eligible Costs


Eye surgery, including laser eye surgery for defective vision

Alcoholism treatment (including transportation to AA meetings)

Fertility treatments

Artificial teeth (and limbs)

Guide dogs, and other service animals


Hearing aids

Braille books and magazines

Lead-based paint removal

Capital expenses for home alterations to address medical conditions (like installing ramps)

Pregnancy tests



Contact lenses, and solutions and cleaners for them

Transportation and lodging essential for medical care

Dental treatment (but not teeth whitening)

Weight-loss programs (see details)

Eye exam



Wig (if hair is lost due to disease)

Who is eligible to establish and fund an HSA?

Only people covered by an HSA-eligible high-deductible health insurance plan can establish and fund an HSA. Not all high-deductible plans qualify. They must meet the following requirements:



HDHP Minimum Deductible Amount


HDHP Maximum Out-of-Pocket Amount


And they must also meet this IRS requirement: "Except for preventive care, [it] may not provide benefits for any year until the deductible for that year is met." A high-deductible plan which pays for any portion of things like prescription drugs or specialist visits before the deductible is met is not HSA-eligible.

This requirement renders many high-deductible plans ineligible for an HSA. For 2016, about 83% of the plans on the federal exchange have deductibles at or above $1,300. However, only 19% of plans are HSA-eligible.

Plan literature available on the exchanges should confirm if the plan is HSA-eligible. You can also call the insurer and ask. The same rules about HSA-eligibility apply to plans offered by employers.

In addition, to be eligible for an HSA, you must have no other health coverage besides the qualified high-deductible health plan, with certain exceptions such as coverage for dental care, vision care, accidents, disability or long-term care. You cannot be enrolled in Medicare. And you cannot be claimed as a dependent on someone else's tax return.

How to set up an HSA

Once you enroll in an HSA-eligible high-deductible plan, you can set-up your HSA after the first day of the first month of your coverage. It’s important to establish the account immediately, even if you don’t put any money into it right away. This is because you can only use HSA money for health expenses that occur after the account has been created. You can contribute up to $3,350 as an individual or $6,750 for a family for each year you are eligible. (You can contribute less if you like.) If you switch out of the plan within a year, your eligible contribution amount will be prorated.

Most banks, credit unions and other financial institutions offer HSAs. Compare their terms so the most money possible goes toward your health expenses, not to bank fees. Most HSAs issue a debit card so you can pay the health expenses at the point of purchase. Some require reimbursement forms.

Important factors when considering an HSA-eligible plan

Factors that should push you towards establishing and funding an HSA include the following:

  • You already have an HSA-eligible health plan or can switch to one
  • You expect to have eligible expenses soon (or ever)
  • You pay a lot of income taxes (perhaps because you are in a high-income tax bracket, have high state income taxes, or a combination)

Factors that might make it reasonable to wait on an HSA include:

  • You need to switch to an HSA-eligible plan (consider premiums, benefits and tax implications when choosing a plan)
  • You don’t have expected health expenses you could pay out of the account
  • You don’t pay a lot of income taxes (perhaps because you are in a low-income tax bracket and have no state income tax)

In contrast to how FSAs work, money you put in your HSA remains there forever, until you use it for an eligible health expense. At age 65, you may also use whatever you have leftover for retirement income.

If you have an HSA-eligible plan and you have money to spare, it makes a lot of sense to fund an HSA even if you don’t have impending health expenses. You get the tax break immediately and you can even invest the money. You can accumulate your contributions and investment returns year after year and the money will be there whenever you need it.

Just one word of caution: under your HSA-eligible plan, you will have to pay toward the deductible if you get any health care beyond preventive care during the year. If you spend your HSA money immediately on something like laser eye surgery or IVF and then need other health care (like for the pregnancy you achieved), you’ll end up paying the deductible with after-tax money anyway.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.