Eligibility for a Health Savings Account

To contribute to an HSA, you must meet 2 conditions:

1. You are not covered by Medicare. HSAs are designed to cover individuals who do not qualify for Medicare. Therefore, you are ineligible for an HSA once you are covered by Medicare. Since determination of eligibility is made month by month, you may be qualified for a deduction for the portion of the year before you are covered by Medicare.
2. You are covered by a high-deductible health insurance policy. You must have a high-deductible health insurance policy for at least some time in 2011. This can be a policy that you have obtained personally or coverage provided by your employer. The determination of whether you have such coverage is made on the first day of the month.

A high-deductible policy is one that falls within certain limits:

2011 High-Deductible Policy Limits

You cannot have any other health coverage, other than accident insurance, dental care, disability coverage, disease-specific coverage (such as cancer insurance), long-term care, vision care, and workers’ compensation.

If you have a separate prescription drugs benefit plan that has no deductible (only copayments for each prescription), you cannot be an eligible individual for HSA purposes.