What is a Health Savings Account?
A Health Savings Account (HSA) is an interest bearing, tax deferred account for the purpose of saving for and paying the deductibles associated with a High Deductible Health Plan (HDHP).
A key aspect of a High Deductible Health Plan (HDHP) is your ability to set aside money to be used to pay your deductible or qualified medical expenses. Contributions to an HSA are tax deductible or, in the case of an employer sponsored plan, made with pre-tax dollars.
Distributions from an HSA (withdrawals) used to pay deductibles and qualified medical expenses are tax and penalty free.
HSA funds that are unused at year end can be carried forward into future years. Unused funds can even be used to supplement your retirement income.
For additional information, please refer to the following resources:
Qualified Medical Expenses: Refer to the IRS website at www.irs.gov for IRS Publication 502
Contribution Limits: Department of the Treasury
Web site: www.treas.gov (Publication 969)