What is a Health Savings Account (HSA)?
A Health Savings Account (HSA) is a savings account that offers a tax-advantaged way for consumers to pay for their health care expenses. Usually paired with a High Deductible Health Plan (HDHP), HSAs help consumers pay for current health expenses and save for future qualified medical and health expenses in retirement. Contributions to an HSA are tax-deductible and distributions can be taken tax-free. You own and control the money in your HSA. You make the decisions on how to spend the money, within IRS guidelines for eligible expenses. The money in HSAs can be invested to take advantage of the potential for future growth. Investment options vary depending on who is managing the account.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003, which was signed into law December 8, 2003, created Health Savings Accounts (HSAs). Individuals participating in high deductible health plans are allowed to make tax deductible contributions to an HSA to fund lifetime medical needs. HSAs can be established for taxable years beginning after December 31, 2003. HSAs are established for the benefit of an individual, are owned by that individual and are portable. High-deductible health plan. Generally, a high deductible health plan (HDHP) is a health plan that satisfies certain requirements with respect to deductibles and out-of-pocket expenses. For self-only coverage, an HDHP has an annual deductible of at least $1,100 and annual out-of-pocket expenses required to be paid (deductibles, co-payments and other amounts, but not premiums) not exceeding $5,500 ($5,600 for 2008).
Related Questions
- I am enrolling in an HSA (Health Savings Account). Do I enter the employee contribution amount or the employee AND the employer contribution amount in the Annual Pledge field?
- I am enrolling in a HSA (Health Savings Account). Do I enter the employee contribution amount or the employee AND the employer contribution amount in the Annual Pledge field?
- What is a Health Savings Account (HSA)?
