HSA Guide
What is hsa and how does it work?
Published January 21, 2024
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Get the appShort answer: You can use an HSA to save tax-free for qualified medical expenses not covered by insurance, with tax-deductible contributions and tax-free interest.
What an HSA is and does
Health Savings Account (HSA) is a versatile tool that offers individuals the opportunity to save money tax-free for qualified medical expenses. It is essentially a personal savings account that allows you to set aside pre-tax income for future medical costs.
How contributions and qualified expenses work
Here's how an HSA works:
- You contribute to your HSA account either through payroll deductions or direct contributions.
- The funds in your HSA can be used to pay for qualified medical expenses not covered by your insurance plan.
- Your contributions are tax-deductible, and the interest and earnings on your HSA investments are tax-free.
- Any unused funds in your HSA at the end of the year roll over to the next year, allowing you to build up savings for future healthcare needs.