If your company offers you a high-deductible health plan (HDHP), also known as a Health Savings Account (HSA) eligible plan, as an option, it's a good idea to become familiar with how it works. The first question people often have is how it differs from a traditional health plan. Here is a quick comparison:
Feature | High-deductible health plan | Traditional health plan |
---|---|---|
Monthly premiums | Monthly premiums Typically are lower. | Monthly premiums Typically are higher, whether or not you use the insurance. |
Annual deductible | Annual deductible True to its name, the deductible is higher. Plans will vary, but generally a minimum of $1,650 for individuals and $3,300 for families 1 . | Annual deductible Will vary by plan and by employer, but generally are lower. |
Out-of-pocket limit | Out-of-pocket limit Out-of-pocket limits are higher in an HDHP. For 2024, those limits are $8,050 for an individual plan, and $16,100 for a family plan. For 2025, those limits are $8,300 for an individual plan, and $16,600 for a family plan. | Out-of-pocket limit Will vary by plan and by employer, but are typically lower. |
Eligible for a Health Saving Account (HSA) | Eligible for a Health Saving Account (HSA) Yes. Another name for an HDHP is an HSA-Eligible Plan. Saving in an HSA can help you cover out-of-pocket expenses, and your employer may match your contributions. | Eligible for a Health Saving Account (HSA) No. |
When it comes to HDHPs, knowledge is power. Be aware of the facts so you can make an HDHP work for you. If you're considering an HSA-eligible plan, you may have some concerns:
An HSA can be paired with a qualified high-deductible health plan and offers the opportunity to save for health care expenses. If you're enrolled in an HSA eligible plan, what you save in premium costs can help offset out-of-pocket expenses not covered by the plan, especially if you put those savings into an HSA.
For example, you might decide to save at least up to the cost of the plan's deductible, in case of any unexpected medical costs.
Many people are discovering the advantages of saving money with a HDHP paired with an HSA, especially for health care expenses now and in the future. Discover if an HSA is right for you.
The annual HDHP deductible is $1,600. At the beginning of year two. You will have more than 60% of this amount saved in your HSA.
1 Per IRS guidelines in 2025, an HDHP is a health insurance plan with a deductible of at least $1,650 if you have an individual plan or a deductible of at least $3,300 if you have a family plan. The deductible is the amount you'll pay out of pocket for medical expenses before your insurance pays anything. In addition, the plan's out-of-pocket limit must be no higher than $8,300 for an individual plan or $16,600 for a family plan. The out-of-pocket limit is the most you'll have to pay in a year for medical expenses covered by your insurance plan.
2 Potential Tax Advantages: You can receive federal income tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax, unless an exception applies. Any interest or earnings on the assets in the account are federal income tax-free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA directly (not through payroll deductions). In addition, HSA contributions may reduce your state income taxes in certain states. Certain limits may apply to employees who are considered highly compensated key employees. Bank of America recommends you contact qualified tax or legal counsel before establishing an HSA.
See how easy it is to use your Bank of America health savings account (HSA) to pay for qualified medical expenses.
A summary of the main features of each type of health and benefit account, and how some accounts can work together.
Compare qualified medical expenses for a Health Savings Account (HSA), Flexible Spending Account (FSA), and Health Reimbursement Arrangement (HRA).
About Triple Tax Advantages: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax free. You may be able to claim a tax deduction for contributions you, or someone other tahn your employer, make to your HSA. Bank of America recommends you contact qualified tax or legal counsel before establishing an HSA.
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Bank of America, N.A. makes available The HSA for Life® Health Savings Account as a custodian only. The HSA for Life is intended to qualify as a Health Savings Account (HSA) as set forth in Internal Revenue Code section 223. However, the account beneficiary establishing the HSA is solely responsible for ensuring satisfaction of eligibility requirements set forth in IRC sec 223. If an individual/employee establishes a HSA and s/he is not otherwise eligible, s/he will be subject to adverse tax consequences. In addition, an employer making contributions to the HSA of an ineligible individual may also be subject to tax consequences. We recommend that applicants and employers contact qualified tax or legal counsel before establishing a HSA.
Bank of America does not sponsor or maintain the Flexible Spending Accounts (FSA) / Health Reimbursement Accounts (HRA) that you establish. The programs are sponsored and maintained solely by the employer offering the plan, or by an individual establishing an independent plan. Bank of America acts solely as claims administrator performing administrative tasks pursuant to an agreement with, and at the direction of, the sponsoring employer or individual under an independent plan. The sponsoring employer or individual under an independent plan is solely responsible for ensuring such arrangements comply with all applicable laws.
The planning tools and information calculators are illustrative only, and accuracy is not guaranteed. They are intended to provide a comparative tool for various consumer health care options and potential costs and savings of those options. Bank of America and its affiliates are not tax or legal advisors. The calculators are not intended to offer any tax, legal or financial advice and do not assure the availability of or your eligibility for any specific product offered by Bank of America or its affiliates. Please consult with qualified professionals to discuss your situation. This site may contain links to third-party content, which may be articles, videos, or calculators, regarding health plans only as a convenience. Some articles, videos and calculators may have been written and produced by third parties not affiliated with Bank of America or any of its affiliates.
Neither Bank of America nor any of its affiliates or employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice.
Please consult with your own attorney or tax advisor to understand the tax and legal consequences of establishing and maintaining a HSA, FSA, Dependent Care FSA, and/or HRA plan.
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Mutual Fund investment offerings for the Bank of America HSA are made available by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a registered broker-dealer, registered investment adviser, Member SIPC, and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). Investments in mutual funds are held in an omnibus account at MLPF&S in the name of Bank of America, N.A., for the benefit of all HSA account owners. Recommendations as to HSA investment menu options are provided to Bank of America, N.A. by the Chief Investment Office (“CIO”), Global Wealth & Investment Management (“GWIM”), a division of BofA Corp. The CIO, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.
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