The Basics of HSA 1. What is a Health Savings Account ("HSA")? A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account. You own and you control the money in your HSA. Decisions on how to spend the money are made by  you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow. 2. What is a "High-Deductible Health Plan" (HDHP)? You must have an HDHP if you want to open an HSA. A HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of healthcare expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover. For 2008, in order to qualify to open an HSA, your HDHP minimum deductible must be at least $1,100 (self-only coverage) or $2,200 (family coverage). The annual out-of-pocket exposure (including deductibles, co pays, and coinsurance) for 2008 cannot exceed $5,600 (self-only coverage) or $11,200 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and co pays & coinsurance) for non-network services.