What is a Health Savings Account (HSA)? - A Comprehensive Guide

A Health Savings Account (HSA) is a tax-advantaged savings account that individuals can use to pay for qualified medical expenses. It is designed to work alongside a high-deductible health plan (HDHP) and offers several benefits to account holders.

Here are some key features of an HSA:

• Contributions to an HSA are tax-deductible
• Interest and earnings on the account are tax-free
• Withdrawals for qualified medical expenses are tax-free
• The account is owned by the individual and is portable

HSAs can be used to cover a wide range of medical expenses, including doctor's visits, prescriptions, dental and vision care, and more. The funds in an HSA can also be invested, allowing for potential growth over time.

It's important to note that not all individuals are eligible to open an HSA. To qualify, you must be enrolled in a high-deductible health plan and not be enrolled in Medicare. Employers may also offer HSAs as part of their benefits package.

A Health Savings Account (HSA) is an excellent option for anyone looking to take control of their healthcare expenses while enjoying tax benefits. Not only does an HSA help you save for medical costs that insurance doesn't cover, but it also allows you to grow those savings over time tax-free.

For those who are covered by a high-deductible health plan (HDHP), HSAs present a unique opportunity. You can contribute money to your HSA, which is tax-deductible, and then access those funds without incurring taxes when they're used for qualified medical expenses.