HEALTH SAVINGS ACCOUNTS
How can I benefit from a HSA?
Many employers offer high-deductible health plans (HDHPs) to control premium costs, and pair this coverage with health savings accounts (HSAs) to help employees with their health care expenses.
An HSA is a tax-favored trust or account that can be contributed to by, or on behalf of, an eligible individual for the purpose of paying qualified medical expenses. For example, individuals can use their HSAs to pay for expenses covered under the HDHP until their deductible has been met, or they can use their HSAs to pay for qualified medical expenses not covered by the HDHP, such as dental or vision expenses.
HSAs provide a triple tax advantage—contributions, investment earnings and amounts distributed for qualified medical expenses are all exempt from federal income tax, FICA tax and most state income taxes. Due to an HSA’s potential tax savings, federal tax law imposes strict eligibility requirements for HSA contributions. Only an eligible individual can establish an HSA and make HSA contributions (or have them made on his or her behalf).