What's an HSA? A Guide to Understanding Health Savings Accounts

Health Savings Accounts (HSAs) are a valuable tool for managing healthcare expenses while saving on taxes. An HSA is a savings account that allows you to set aside pre-tax income for qualified medical expenses. It is a tax-advantaged account available to individuals who are enrolled in a High Deductible Health Plan (HDHP).

Here are some key points to help you understand what an HSA is:

• Contributions to an HSA are tax-deductible, reducing your taxable income.
• Withdrawals for qualified medical expenses are tax-free.
• Unused funds in an HSA roll over from year to year, unlike a Flexible Spending Account (FSA).
• HSAs are portable, meaning you can keep your account even if you change jobs or health insurance plans.

Benefits of having an HSA include:

• Lowering your taxable income
• Building a nest egg for future medical expenses
• Having more control over how you spend your healthcare dollars
• Preparing for unexpected medical costs
• Providing flexibility in choosing healthcare providers and treatments

When considering an HSA, it's essential to understand the contribution limits, eligible expenses, and any fees associated with the account. Consulting with a financial advisor can help you make informed decisions about using an HSA to meet your healthcare and financial goals.

Health Savings Accounts (HSAs) are an essential financial tool that empowers you to manage your healthcare costs while enjoying significant tax benefits. By contributing pre-tax income to an HSA, you can efficiently budget for medical expenses without impacting your take-home pay.