What is a Health Savings Account (HSA)? Understanding the Basics of HSA Health Savings Account

Health Savings Account (HSA) is a type of account that allows individuals to save money for medical expenses tax-free. It is designed to work in conjunction with a high-deductible health plan (HDHP). With an HSA, you can contribute pre-tax dollars into the account, which can then be used to pay for qualified medical expenses.

One of the key benefits of an HSA is that the funds in the account roll over from year to year, so you can build up a substantial savings for future healthcare needs. In addition, the money in an HSA can also be invested, allowing it to grow over time.

Some important points to note about HSAs:

• Contributions to an HSA are tax-deductible.
• The money in an HSA belongs to the account holder and can be used for qualified medical expenses for themselves, their spouse, and any dependents.
• Withdrawals for non-qualified expenses before age 65 may incur taxes and penalties.
• After age 65, withdrawals can be made for any purpose penalty-free, although they may still be subject to income tax.

Overall, an HSA is a valuable tool for saving for healthcare costs both now and in the future. It offers tax advantages and flexibility that make it a popular choice for many individuals and families.

A Health Savings Account (HSA) is more than just a savings account; it's a financial lifeline designed to help you manage your healthcare costs effectively. This tax-advantaged account is paired with a high-deductible health plan (HDHP) and enables you to stash away pre-tax dollars for future medical expenses.