A Health Savings Account (HSA) can save you money on your health care. The HSA program has two parts: a high-deductible health plan (which usually costs less than other health plans) and a tax-advantaged, portable savings account that you own to be used to pay for out of pocket medical expenses. An HSA includes the following:
- A tax-exempt personal savings account to be used for qualified medical expenses.
- A health plan with a high deductible health plan (HDHP).
- A health plan with out-of-pocket limitations.
- Catch-up contributions for individual 55 & older through Medicare.
- Each year the HSA Limits change to reflect the cost of living.
By making you a part of the medical services decision process, HSAs are designed to help you manage medical expenses and reduce the continuing raising of health care expenses. Equally as important, the money you save remains part of your account, even if you leave your present employer. Funds in the account can grow tax-free through investment earnings. An HSA account is much like an Individual Retirement Account (IRA), except that deposits and qualified withdrawals are tax-exempt. Account balances can be used to pay for a wide range of medical expenses — including some ordinarily not covered by insurance — as well as some insurance premiums. Like IRAs, HSA funds can be invested in stocks, bonds, and mutual funds.