A Health Savings Account is a type of savings account the allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. You may be able to lower your overall health care costs by using the untaxed dollars in a Health Savings Account to pay for things such as copayments for doctors visits, deductibles, and more.
How does an HSA work? Each year, you decide how much to contribute to your HSA account, though you cannot exceed government-mandated maximums.
HSAs have three tax advantages: 1. contributions are tax-deductible, 2. the money grows tax-free, and 3. the money can be taken out tax-free for qualified medical expenses.
Health Savings Accounts are designed to help you save for future qualified medical expenses. These accounts allow you to make tax-deductible contributions, accumulate tax-deferred earnings, and take tax-free distributions whenever you need to pay for medical expenses.
Another great benefit of a Health Savings Account is that any unused savings accumulates year over year with tax-deferred earnings. Any unspent account balances will continue to earn interested each year, so there’s no “use it or lose it” provision.
*Individual tax situations may vary. Consult your tax advisor for further information.