Compatible Plans

• Not all group benefit plans offer HSAs. There is a specific category of group health insurance that employers can offer which allow HSAs, known as HSA-compatible plans. These plans have specific characteristics that tend to offer slightly less coverage than other options. For instance, many of the plans have higher deductibles than other insurance options. They are also required to have preventive benefits included in the package. These preventative benefits encourage employees to eat well and exercise to keep themselves healthy.
  
  

Compatible Accounts

• HSAs also have compatibility issues when it comes to other types of savings accounts. Here the details differ based on policies and state laws. If a policyholder is already covered by another HSA or a flexible savings account (FSA) through another policy, then he probably will not qualify for an HSA. For instance, a spouse with an FSA may not be able to use funds from a policyholder's HSA. Multiple tax-free savings accounts are discouraged by policies and legislation.
  
  

Compatible Coverage

• HSAs are also limited based on what expenses they are compatible with. Each policy has a list of qualified expenses that the funds can be used to pay for, but there are also expenses that HSAs cannot cover. Qualified expenses are typically costs associated with necessary medical care and not just any type of procedure or treatment. When funds are used to pay for non-qualified expenses, the money is taxed as if it were normal income.
  
  

Advantages

• The tax benefits that HSAs offer can save users money every year that they would otherwise have to pay in income taxes, as long as they use the HSA funds during that year. HSA accounts also tend to have rates that can earn interest. The plans that are HSA-compatible, while they have higher deductibles, also have lower premiums and encourage healthy lifestyles.