What to Know About Health Savings Accounts

These tax-advantaged accounts can help you pay for costs not covered by a high-deductible health-insurance policy.

My employer is offering a high-deductible health-insurance policy next year but isn’t contributing anything to a health savings account. Can I contribute money to an HSA on my own and, if so, can I get a tax break?

Yes and yes. More employers plan to offer high-deductible health-insurance policies during open-enrollment season this year, and 20% of the large employers surveyed by the National Business Group on Health intend to make a consumer-directed health plan (generally a high-deductible policy) their only health-insurance choice in 2011. Many employers like high-deductible policies because raising the deductible not only lowers premiums but also tends to motivate workers to be more careful with their own health-care costs when they’re paying part of the bills themselves. (See Health-Insurance Changes for 2011 for more information.)

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.