Understanding How HSA Works - A Comprehensive Guide

Health Savings Account (HSA) is a tax-advantaged savings account that allows individuals to save money for medical expenses.

Here's how HSA works:

• Contribution: Individuals can contribute to their HSA either through payroll deductions or personal deposits.
• Tax Benefits: Contributions are tax-deductible, and the funds in the HSA grow tax-free.
• Withdrawals: Withdrawals from the HSA for qualified medical expenses are tax-free.
• Unused Funds: Unused funds roll over year after year, unlike Flexible Spending Accounts (FSAs).
• Portability: HSAs are portable, meaning you can keep the account even if you change jobs or health plans.

Additional Details:

• HSA funds can be used for a wide range of medical expenses, including deductibles, copayments, prescriptions, and more.
• There are contribution limits set by the IRS each year.
• Employers can also contribute to their employees' HSAs.

A Health Savings Account (HSA) not only provides a savings option for medical expenses but also acts as a smart financial tool for your future health care needs. This means the money you contribute can be a significant cushion for unexpected health costs.