What is a Health Savings Account?
A Health Savings Account (HSA) is a special account designed to help you take advantage of Section 125 of the Internal Revenue Code. It allows you to pay certain qualified expenses on a pre-tax basis, thereby reducing taxable income. If you currently have a High Deductible Health Plan (HDHP), a Health Savings Account may be the perfect option for you.
Unlike a Flexible Spending Account (FSA), funds in an HSA can be rolled over and used the following year. As long as you don’t go over the limits that apply to your type of insurance coverage, you can contribute as much as you want, as often as you want throughout the year until your tax return date. These funds can be used to pay for eligible expenses, such as deductibles, co-payments, orthodontics, glasses, and more.
- Unlike FSAs, there is no “use it or lose it” stipulation. The money rolls over year to year.
- The ability to make additional deposits in person, by mail, or online (including same-day deposits)
- No monthly service charges
- Instantly issued VISA debit card
- Earns dividends
An eligible individual is someone who:
- Is covered under a High Deductible Health Plan (HDHP),
- Is generally not covered by any health plan that is not an HDHP,
- Is not enrolled in Medicare or has not received VA medical benefits in the last three months, and
- Is not eligible to be claimed as a dependent on another person’s tax return.