What is a Health Savings Account?
A Health Savings Account (HSA) is a tax-exempt account established solely for the purpose of paying out-of-pocket qualified medical expenses for you and your family when covered under a high-deductible health plan (HDHP). The funds are managed and controlled by you without restrictions of healthcare professionals and facilities. These funds can be rolled over year after year allowing you flexibility to manage routine as well as unexpected healthcare expenses. And like most retirement accounts, your HSA follows you if you change employment.
A Health Savings Account (HSA) is an investment account created by the Medicare Prescription Drug and Modernization Act of 2003. The account allows for tax-deductible contributions and tax-free distributions (including earnings), when the distributions are used for qualified medical expenses and the individual is covered by a high deductible health insurance plan. Your money can also accumulate with tax-free interest until retirement, when you can withdraw it for any purpose and pay ordinary income tax.
A Health Savings Account (HSA), is a tax-sheltered account you can set-up in conjunction with an HSA-qualifying health policy. You may contribute money into an HSA account, and then use that money to pay for deductibles, prescriptions, dental services, vision services or nursing home expenses. The big advantage to HSA’s are that contributions, investment growth and withdrawals for health-related expenses are all free from taxation. Any money not spent in your HSA account continues to accumulate as you contribute to it every year. This money rolls over from year to year. The annual limit on how much you can contribute to an HSA changes periodically and is determined by the federal government. See “who can have an HSA” for more information.
A. A Health Savings Account, or HSA, is a savings account which can be used to pay medical expenses not covered by insurance. Contributions made by individuals and family members are tax-deductible (for the account beneficiary) even if the account beneficiary does not itemize. Employer contributions are made on a pre-tax basis and are not taxable to the employee. Employers will be allowed to offer HSAs through a cafeteria plan.
