Things To Do If You’re Not Eligible for a Health Savings Account
Written by
Josephine Nesbit
Edited by
Zuri Anderson
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Even if you don’t qualify for a health savings account (HSA), you still have ways to set money aside and plan for medical expenses.
To qualify for an HSA, you must be enrolled in a high-deductible health plan (HDHP) as of the first day of the month, and you can’t have other health coverage outside of permitted plans like dental, vision or long-term care, according to the IRS. You also can’t be enrolled in Medicare or be claimed as a dependent on someone else’s tax return.
Here are a few alternatives to consider to help you plan and manage healthcare costs.
Look Into a Flexible Spending Account (FSA)
If your employer offers them, one option is to look into a flexible spending account (FSA), Charlene Rhinehart, certified public accountant (CPA) and personal finance editor at GoodRx, recommended.
“FSAs let you set aside pre-tax dollars to pay for qualified medical, dental and vision expenses that might not be covered by insurance,” Rhinehart wrote in an email.
These accounts are relatively common. A 2024 survey conducted by the Bureau of Labor Statistics (BLS) estimated that 72% of state and local government workers and 47% of private-sector workers had access to an FSA, as reported by the Employee Benefit Research Institute.
“Contributions are usually made through payroll deductions. Your employer can also contribute, but it is not required,” explained David Rosenstrock, director of financial planning and investments at Wharton Wealth Planning. “Money goes in and comes out tax-free when used for qualified expenses. Unlike an HSA, FSA funds generally do not roll over from year to year.”
Consider a Health Reimbursement Arrangement (HRA)
Another option is a health reimbursement arrangement (HRA).
“Some employers offer these to help cover certain out-of-pocket medical costs,” Rhinehart wrote. “Although unlike an HSA, an HRA is fully funded and owned by your employer, so you don’t contribute to it directly, but it can still be a great way to pay for qualified medical expenses tax-free.”
Rosenstrock also pointed out that since it’s not funded with your money, there are no employee tax deductions.
“You will pay much more out-of-pocket if you visit providers outside of your health plan’s network. So, staying in-network can be a good opportunity to save on medical expenses,” he explained. “Also, for maintenance medications, using your plan’s mail-order service for a 90-day supply can be more cost-effective.”
Ask To Be Put on a Monthly Payment Plan
And if you get a large medical bill that’s difficult to pay, Rhinehart recommends asking your provider if you can make monthly payments instead.
“Many clinics and hospitals are willing to set up payment plans directly with you. In most cases, you won’t have to worry about interest. This can help you avoid high-interest medical financing or credit card debt,” she wrote. “Even small monthly payments can chip away at your balance and reduce the stress of falling behind.”
Look Into Assistance Programs
There are assistance programs available to help you pay for medical expenses.
“You can even look into manufacturer savings programs or see if you are eligible for patient assistance programs, which can help reduce your out-of-pocket costs,” Rhinehart wrote.
Manufacturer savings programs are offered by pharmaceutical companies and typically provide coupons, discounts or copay assistance to help lower the cost of specific prescription medications, usually for people with commercial insurance.
Patient assistance programs, on the other hand, are run by pharmaceutical companies or nonprofit organizations and are designed to help individuals who are uninsured or have limited income access medications at little to no cost.
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