A Health Savings Account (HSA) is a type of personal savings account that is designed to help individuals pay for medical expenses. It is typically paired with a high-deductible health plan (HDHP), which is a type of health insurance plan that has a high deductible, or the amount you must pay out of pocket before your insurance coverage begins.
HSAs are tax-advantaged accounts, which means that contributions to the account are tax-deductible and any funds in the account can be used tax-free to pay for qualified medical expenses. This includes expenses like deductibles, copayments, and prescriptions.
One of the main benefits of an HSA is that it provides a way for individuals to save money on healthcare costs while still having access to the coverage they need. It also allows individuals to take control of their healthcare expenses and make informed decisions about how to use their healthcare dollars.
To be eligible for an HSA, you must be enrolled in an HDHP and not be covered by another type of health insurance plan, such as a traditional health plan or a Medicare plan. You also cannot be claimed as a dependent on someone else’s tax return.