Health Savings Accounts (HSAs)
A Health Savings Account (HSA) is a triple tax-advantaged savings account that helps you pay for medical expenses. It’s designed to be used alongside a high-deductible health plan (HDHP).
Triple Tax Advantage?
The money you put in is TAX-FREE
The money you contribute is not taxed, therefore, it reduces your taxable income. You can then use the funds on qualified medical expenses. There is an annual limit you can contribute.
The money grows TAX-FREE
You can elect to invest the money in mutual funds or other options once your balance reaches a certain threshold--and any growth is tax free. Any unused funds will rover over to the next year--they do not expire.
Withdrawals are TAX-FREE
As long as you use the money for qualified medical expenses, you do not pay any taxes on withdrawals.
What makes you eligible for an HSA?
To contribute to an HSA, you must:
- be enrolled in a high-deductible health plan (your plan should tell you if you qualify)
- not have other non-HDP coverage such as a spouse's employer plan
- Not be enrolled in Medicare
- Not be claimed as a dependent on someone else's taxes