What is a Health Savings Account?
You've probably heard of an HSA, but what is it? An HSA, also known as a Health Savings Account, is a type of account that allows you to set aside money on a pre-tax basis for qualified medical expenses.
Any contribution made to your HSA from yourself or employer is excluded from your income and interest is earned on the entire balance. Your earnings and withdrawals are tax free if used for qualified medical expenses such as prescriptions, doctor and dentist appointments, and medical transportation.
An HSA can only be used if you have a High Deductible Health Plan. These insurance plans typically have lower monthly premiums, but the insured person pays more of their own healthcare costs before the insurance company starts to pay.