What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) combines high deductible health insurance with a tax-advantaged medical savings account.  Withdrawals used to pay qualified medical expenses, including your insurance deductible, coinsurance or co-payments are tax-free.  Money in the savings account not used for medical expenses is yours to keep, earns interest and can be directed toward long-term investment vehicles, such as mutual funds, to maximize the future value of your HSA.  Also, an HSA in no way restricts your ability to have an IRA.

Advantages of an HSA:

Tax-deductible
Contributions to your HSA are 100% deductible (up to the legal limit) — just like an IRA.

Tax-free
Withdrawals to pay qualified medical expenses, including dental and vision, are never taxed.

Tax-deferred
Interest earnings accumulate tax-deferred, and if used to pay qualified medical expenses, are tax-free.

HSA money is yours to keep
You own the funds in your account from day one. You decide when and how to use them.  Unlike a Flexible Spending Account, There is no use-it-or-lose-it rule.  Unused money in your HSA isn’t forfeited at the end of the year; it continues to grow, tax-deferred.

Portable
You own your HSA account. You keep the account regardless of whether you change jobs or medical plans.


Why High Deductible Health Insurance?

To get the benefits of an HSA, the law requires that the savings account be combined with high deductible health insurance.


Who can have an HSA?

You must:
1) Be covered by high deductible health insurance
2) Not be another person's dependent
3) Not be enrolled in Medicare; and
4) Not be covered under other health insurance  - Note: "other health insurance" does not include insurance coverage for: accidents, dental care, disability, long-term