Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged savings account that individuals with a high-deductible health plan (HDHP) can use to save money specifically for qualified medical expenses. Contributions to an HSA can be made by both the employee and employer and are tax-deductible or pre-tax. Funds in the account grow tax-free and can be withdrawn tax-free when used for eligible healthcare costs such as doctor visits, prescriptions, and medical equipment. Unlike HRAs, HSAs are owned by the individual, are portable, and funds roll over year to year without expiration.

Key Facts

• Eligibility: Must be enrolled in a qualified high-deductible health plan (HDHP) to contribute.‍
• Tax Benefits: Contributions are tax-deductible, grow tax-free, and withdrawals for qualified expenses are tax-free.‍
• Ownership: HSAs are owned by the individual, not the employer, making them portable between jobs.‍
• Contribution Limits: The IRS sets annual contribution limits which may change yearly.‍
• Qualified Expenses: Include a wide range of medical costs like doctor visits, prescriptions, dental, vision care, and more.

1. What is a Health Savings Account (HSA)?

An HSA is a tax-advantaged savings account for individuals with high-deductible health plans to save for medical expenses.

2. Who is eligible to open and contribute to an HSA?

You must be enrolled in a qualified high-deductible health plan (HDHP) and not be covered by other disqualifying health insurance.

3. What expenses can I pay for with HSA funds?

You can use HSA funds tax-free for qualified medical expenses such as doctor visits, prescriptions, dental care, and vision care.

4. Can I contribute to an HSA if I have another health plan?

Generally, no. You must be covered by an HDHP and not have other health coverage that disqualifies you from contributing.

5. What happens to HSA funds if I change jobs?

Since HSAs are owned by the individual, your funds stay with you and can be used regardless of employment status.