HSA
A tax-advantaged savings account available to individuals enrolled in a High-Deductible Health Plan (HDHP), used to pay for qualified medical expenses on a pre-tax basis.
Contributions are tax-deductible; growth is tax-free; withdrawals for qualified medical expenses are tax-free (triple tax advantage). 2025 contribution limits: $4,300 (self-only) and $8,550 (family). HSA balances roll over each year and can be invested for long-term growth.
Also known as
Related terms
- ACA (Affordable Care Act)
A federal law (signed 2010) that expanded access to health insurance by creating the Health Insurance Marketplace, establishing income-based subsidies, and requiring insurers to cover pre-existing conditions.
- HRA
An employer-funded account that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums on a tax-free basis.
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Frequently asked questions about HSA
What is an HSA?+
An HSA is a special savings account that helps you pay for medical costs. You can only open one if you have a high-deductible health plan. The money you put in is tax-free, and you can use it for things like doctor visits, prescriptions, and other health-related expenses. It's a great way to save for future healthcare needs.
Who can get an HSA?+
You can get an HSA if you are enrolled in a High-Deductible Health Plan (HDHP). This type of health plan has a higher deductible than most, meaning you pay more out-of-pocket before your insurance starts to cover costs. You can't be covered by another health plan, like Medicare, to open an HSA.
How do I use an HSA?+
You can use your HSA to pay for qualified medical expenses. This includes things like doctor visits, dental care, eye care, prescriptions, and even some over-the-counter medicines. You can often get a debit card linked to your HSA to make payments directly, or you can pay yourself back if you used other money.
What are the benefits of an HSA?+
HSAs offer great tax benefits. The money you put in is tax-free, it grows tax-free, and you can take it out tax-free for medical costs. It's like a triple tax advantage! Any money you don't use rolls over each year, and after age 65, you can use it for non-medical expenses without a penalty, though it will be taxed then.