Health Savings Account

What Does Health Savings Account Mean?

A Health Savings Account (HSA) is an account designed for individuals covered under a high-deductible health plan (HDHP). It helps pay for medical expenses not covered by the HDHP and offers three tax advantages: deposits are tax-deductible, interest earned is tax-free, and withdrawals are also tax-free, provided they are used for qualified medical expenses.

Insuranceopedia Explains Health Savings Account

To qualify for an HSA, an individual must have a high-deductible health plan (HDHP), must not be listed as a dependent on another person’s tax return, and must not be enrolled in Medicare. Contributions can be made by you or your employer, up to a maximum annual limit, and the funds are then invested. These funds can be used to pay for qualified medical expenses, including dental, vision, and over-the-counter drugs.