How Does an HSA Work? A Comprehensive Guide

Health Savings Accounts (HSAs) are a popular way for individuals to save money for medical expenses while enjoying tax benefits. But how exactly does an HSA work?

An HSA is a type of savings account that allows you to set aside pre-tax money to pay for qualified medical expenses. Here's how it works:

1. To open an HSA, you must be enrolled in a high-deductible health plan (HDHP).
2. You can contribute money to your HSA, up to the annual limit set by the IRS.
3. The money in your HSA grows tax-free through investments.
4. You can use the funds in your HSA to pay for medical expenses like doctor's visits, prescriptions, and more.
5. Any unused funds roll over from year to year, so you can build up savings over time.

Overall, an HSA is a flexible and tax-advantaged way to save for healthcare costs both now and in the future.

Health Savings Accounts (HSAs) are more than just savings accounts; they offer a strategic way for individuals to manage their healthcare costs while benefiting from tax savings. Understanding how an HSA works can empower you to make the most of your healthcare budget.