What is an HSA?
Simply put, a health savings account (HSA) is a tax-exempt account established for the purpose of paying or reimbursing qualified medical expenses for an individual, spouse or family. To be eligible to open an HSA, an individual must first be in a HSA-qualified high deductible health plan (HDHP). High Deductible plan is a $1350 or higher, annul deduction per person and $2700 for a family.
An HSA provides triple tax savings. Funds are deposited on a pre-tax or tax-deductible basis, earnings grow tax-free and withdrawals for qualified medical expenses are tax-free.
HSA funds roll over from year-to-year and can be used or saved depending on your financial needs.
In short, an HSA is like a 401(k) or IRA for medical expenses, only better because withdrawals for qualified expenses are tax-free, before retirement age.
Benefits of an HSA
More Benefits of an HSA
Keep Your Savings
The money in your HSA rolls over year after year (it’s not use-it-or-lose-it like a flexible spending account).
Grow Your Savings
You can invest your HSA funds and let them grow long-term like an IRA or 401(k).
Pay for Your Family
You can use your HSA funds to pay for your spouse or tax dependents’ qualified medical expenses tax-free, even if they’re on different health plans or ineligible for HSAs. Qualified medical expenses include doctor’s visits, prescriptions, dental bills, and more.
Take Funds With You
Because HSAs are individually-owned, they stay with you when you change jobs or retire. And even if you become ineligible to contribute to your HSA, you can continue to pay for qualified medical expenses tax-free from the funds currently in your account.
