HSA Eligible Bronze Plans: What the New Rule Means for You

By Heather Sprague, Licensed Health Insurance Agent · Reviewed by Michael Sprague, Licensed Health Insurance Agent

HSA eligible bronze plans are now the rule: every marketplace Bronze and Catastrophic plan works with a health savings account. So, you can save pre-tax money for medical bills, even if your deductible misses the old HSA limits.

For the coming tax year, one person can put up to $4,500 into an HSA. Here's how the change works and who gains the most. Questions? Call 888-730-6031.

What Changed for HSA Eligible Bronze Plans?

Federal law now treats Bronze and Catastrophic plans as high-deductible health plans for HSA purposes. The change applies to months starting with the current plan year, according to IRS guidance on expanded HSAs.

Before, a plan had to meet strict deductible and out-of-pocket rules to pair with an HSA. Many Bronze plans didn't. Now, these plans qualify even if they miss those limits.

The rule also covers off-exchange versions of the same Bronze plan. However, employer group plans bought through the small-business exchange generally don't qualify. HealthCare.gov now says all Bronze and Catastrophic plans work with HSAs, as its metal level page notes.

If you want a refresher on how tax credits fit in, see our guide to marketplace subsidies.

How Much Can You Put in an HSA?

For the coming tax year, the limit is $4,500 for self-only coverage and $9,000 for family coverage. People 55 and older can add a $1,000 catch-up amount.

Sources: IRS HSA guidance (current year) and the healthinsurance.org HSA guide, citing IRS figures for the coming year.

"Family" coverage only needs to cover you and at least one other person. In other words, a Bronze plan HSA for a couple can use the family limit.

Who Can Open an HSA With a Bronze Plan?

You can contribute if a Bronze or Catastrophic plan is your only health coverage, with a few exceptions. In addition, you can't be on Medicare, and no one else can claim you as a dependent.

• No other disqualifying coverage: a spouse's low-deductible plan, for example, can block contributions.
• Medicare: once you enroll in Medicare, new contributions stop.
• Dependents: if someone can claim you on their tax return, you can't contribute.
• Catastrophic limits: these plans are for people under 30 or with a hardship exemption.

Keep in mind that tax credits don't apply to Catastrophic plans. For many people, then, a Bronze plan is the more useful choice. Our catastrophic health insurance guide compares the two.

How HSA Eligible Bronze Plans Help Self-Employed People

A health savings account with a Bronze plan can lower your taxes and your marketplace income at the same time. That double benefit matters near the 400% subsidy cliff.

HSA deposits reduce the modified adjusted gross income the marketplace uses, according to the healthinsurance.org subsidy guide. So, a $4,500 deposit could help keep a single person under the $63,840 line.

Self-employed people may also deduct their premiums. Together, these breaks can add up. See our guide to self-employed health deductions and our page on the subsidy cliff for details.

What Can You Pay For With HSA Money?

You can use HSA money tax-free for qualified medical costs, such as deductibles, copays and coinsurance. However, HSA funds generally can't pay premiums.

• Going in: contributions are deductible even if you don't itemize.
• While invested: earnings in the account grow tax-free.
• Coming out: withdrawals for qualified medical costs are tax-free.
• Penalty for other uses: the IRS taxes non-medical withdrawals and usually adds a 20% extra tax before age 65.

The account stays yours, even if you change plans. Unused money rolls over each year. To see how Bronze compares with other tiers, read our Bronze, Silver and Gold guide.

HSA Eligible Bronze Plans FAQs

Do I have to buy my Bronze plan on HealthCare.gov?

Not always. The IRS says an off-exchange plan counts if the exchange also sells the same plan.

However, tax credits only apply to plans bought through the marketplace. Most people who qualify for savings should enroll there or through a licensed agent.

Can I open an HSA with a Catastrophic plan?

Yes. A Catastrophic plan HSA is now allowed too. These plans are only for people under 30 or those with a hardship exemption.

Also, you can't use premium tax credits for them. Compare a Bronze plan's net price after any credit before you choose.

Where do I open the HSA itself?

Your health plan doesn't hold the account. Instead, you open it with a bank, credit union or other HSA trustee.

Then, you deposit money and keep receipts for medical costs, since the IRS may ask for proof later. Our health insurance FAQ library answers more account questions.

Next Steps for HSA Eligible Bronze Plans

HSA eligible bronze plans give budget shoppers a tax break they didn't have before. First, choose a Bronze plan that covers your doctors. Next, open an HSA and set up regular deposits.

Want help picking a plan? Call a licensed Vivna agent at 888-730-6031, Monday through Friday, 9 a.m. to 6 p.m. Eastern.

You can also browse our individual and family health plans. Because HSA rules are tax rules, talk to a tax professional about your situation.

Sources

1. IRS: Notice on expanded availability of health savings accounts
2. IRS: New tax benefits for HSA participants
3. IRS: Publication 969, Health savings accounts
4. HealthCare.gov: The "metal" categories
5. healthinsurance.org: Health savings account
6. healthinsurance.org: Will you receive an ACA premium subsidy?

Related Guides

• How health insurance subsidies work
• Bronze vs. Silver plans
• How deductibles work
• Self-employed health insurance guide

Vivna Insurance is a licensed independent agency, not a government website. Our help is free; we are paid by the insurance companies we work with. This article is general information, not tax advice; plan availability, rates and savings vary by county and income.