Is HSA a Section 125 Plan? - Understanding the Basics of Health Savings Accounts

Health Savings Accounts (HSAs) have gained popularity in recent years as a tax-advantaged way to save for medical expenses. Many people wonder if an HSA is the same as a Section 125 plan. The short answer is no, they are not the same, but they can work together in certain situations.

Section 125 plans, also known as cafeteria plans, allow employees to contribute a portion of their pre-tax salary to pay for certain benefits, such as health insurance premiums. On the other hand, an HSA is a savings account that individuals can contribute to with pre-tax dollars to cover qualified medical expenses.

Here are some key differences between an HSA and a Section 125 plan:

• HSAs are individual savings accounts, while Section 125 plans are offered through an employer.
• Contributions to an HSA are owned by the individual and can be carried over from year to year, whereas funds in a Section 125 plan are
  

  Health Savings Accounts (HSAs) have gained significant traction for those looking to save money on medical expenses, but many people find themselves confused about the relationship between HSAs and Section 125 plans. While they are distinct from each other, they can indeed complement one another in funding healthcare costs.