Health Savings Accounts (HSAs)

A Health Savings Account (HSA) is a tax-advantaged savings account for qualified medical expenses, paired with a High Deductible Health Plan (HDHP). It offers triple tax benefits: deductible contributions, tax-free growth, and tax-free withdrawals for eligible costs, helping lower out-of-pocket healthcare expenses.[1][4]

How HSAs Work

HSAs require enrollment in an HDHP, which has lower premiums but higher deductibles. Contribute pre-tax via payroll or deduct post-tax contributions up to IRS limits. Funds roll over yearly, can be invested tax-free, and remain yours even if you change jobs or retire.[2][3][6]

Key Benefits and Eligibility

See The Tax Benefits of Health Savings Accounts (HSAs) for details on the triple tax advantage. Eligible if you have an HDHP, no Medicare, no other disqualifying coverage, and not a tax dependent. Unlike FSAs, no “use it or lose it” rule applies.[1][2][4]

Qualified Expenses

Use for deductibles, copays, prescriptions, dental, vision, and more. Non-qualified withdrawals before age 65 incur taxes plus a 20% penalty. Keep receipts for IRS compliance.[1][5][6]