How to Open an HSA in Colorado

A health savings account (HSA) can make all your medical expenses tax deductible. It can even allow your savings to grow tax-free and act as a second retirement fund. However, it must be set up the right way. The good news is that opening an HSA in Colorado is not as difficult as it might sound.

You can only contribute to an HSA if you have a qualified health insurance plan. If you don’t have a qualifying high deductible health plan, you can either find one that is HSA qualified or enroll in the MPB Select healthshare plan, which can also work with an HSA.

Once your HSA plan is in place, you just need to set up the HSA with any bank that offers them. HSA Bank is one of the most popular, but there are many others.

What Is a Health Savings Account?

Before we delve into how to open an HSA in Colorado, let’s touch on a few of the basics. For instance, what is a health savings account in the first place? Really, it’s nothing more than a savings account specifically created to help you pay for eligible healthcare expenses that aren’t covered under your medical, dental, or vision plan, as well as to help you save for retirement. As such, an HSA can augment your 401(k), IRA, or other conventional retirement account, while making it more affordable to get the healthcare that you need today.

Are HSAs Legal in Colorado?

Yes, health savings accounts are legal in Colorado, as well as across the rest of the country. However, there are stringent rules in place that govern how and when an HSA can be created, so you’ll need to make sure to dot your I’s and cross your T’s. Working with your Personal Benefits Manager can help ensure that you’re able to create the right HSA plan and choose the best bank possible.

Why Open an HSA in Colorado?

You’re already contributing to a retirement fund, and chances are good that you have health insurance. So, why should you consider an HSA? Here are just a few reasons I think this should be a “no-brainer” for anyone who wants more peace of mind and affordability when it comes to their health and financial future:

• You benefit from tax-free contributions, tax-free qualified purchases, and tax-deferred interest and growth.
• If you move out of Colorado, you can take the account with you.
• You never have to “use it or lose it” – your money is always accessible to you.
• Your funds don’t expire.
• You can supplement your other retirement accounts. No one has ever said “I have too much money” during retirement.
• With most banks, when your balance reaches $2,000, you can invest the money and earn tax-free interest.
• You can pull from the account for other spending needs (although non-healthcare uses will incur taxes).

How to Open an HSA: A Guide for Coloradans

Ready to open your HSA and start growing your savings while ensuring you can afford your healthcare? Let’s get started.

Check Your Eligibility

Step one is to check your eligibility. You’ll need to be enrolled in a qualifying high deductible health plan (HDHP) such as Cigna HDHP or KP HDHP (both are recommended by the Colorado Division of Human Resources, but there are others that qualify, too).

Next, make sure that you are not covered under any unqualified health plan. That means you cannot be enrolled in your spouse’s health care flexible spending account. Your Personal Benefits Manager can explain which health plans are not qualified and help you make changes so that you conform to Colorado’s eligibility requirements.

Colorado also explicitly states that you cannot be enrolled in either Medicare or Tricare, and you cannot be claimed as a dependent on anyone else’s taxes.

If you meet all these requirements, you’re eligible to open an HSA in Colorado.

Note that if you don’t currently have an HSA-qualified HDHP plan, you can either enroll in one or choose to open an MPB Select healthshare plan. That plan will also work with an HSA. Not sure which one is the best fit for your needs, budget, and future? Talk with one of our Personal Benefits Managers to better understand what each offers so you can make an informed decision.

What Is a High Deductible Health Plan?

Not sure what an HDHP is? Simply put, they’re plans designed to provide healthcare coverage but come with higher deductibles than what you’ll find with traditional health insurance. Those high deductibles usually mean lower premiums, helping you save money while still having protection in place for major needs.

What About Costs, Contribution Limits, and Maximum Out-of-Pocket Expenses?

The IRS sets contribution limits for HSAs every year. For 2024, they are $4,150 for anyone with a single plan and $8,300 for those with a family plan. The minimum deductible is $1,600 for the single plan and $3,200 for the family plan. Maximum out-of-pocket expenses are $9,450 for single plans and $18,900 for family plans.

Choose Your Bank

To set up an HSA in Colorado (or anywhere else in the US), you’ll need two things. We’ve already touched on the HDHP, but you will also need a bank. As I mentioned already, you must make sure that your HDHP is HSA-qualified, which means that a bank can use it to set up your health savings account. Note that some healthshare plans can take the place of a bank, such as the MPB Select plan.

What banks might you choose? Quite a few can help, including:

• Bank of Colorado
• Optum Bank
• Community Banks of Colorado
• PB&T Bank
• FirstBank
• Eastern Colorado Bank
• Sooper Credit Union
• Meridian Trust
• Credit Union of Colorado
• Colorado Credit Union
• Timberline Bank
• Bellco Credit Union

The list above is not complete – there are many other banks and credit unions throughout Colorado that can help you set up your health savings account. Make sure to compare things like maintenance fees, daily balance requirements, minimum opening deposits, and other factors that will affect your experience before deciding on a particular bank, though.

Here’s to Your Health and Wealth!

Opening an HSA is a smart decision that can have profound effects on your health and wealth today and down the road. It allows you to deduct medical expenses from your taxes, essentially making them free! You can also allow your savings to grow tax-free.

However, perhaps the most important benefit of a health savings account is the peace of mind it can offer. You’ll have money available to cover second or third options, alternative treatments, and doctors who might be outside your network to name just a few of the benefits.

Are you interested in learning more about health savings accounts? Need help choosing the right HDHP? Speak with one of our Personal Benefits Managers today. They’ll help you chart a course forward with confidence.