Individual Health Savings Account (HSA)
A Health Savings Account (HSA) allows you to save for medical expenses and gain potential tax advantages. Paired with a high-deductible health plan, the HSA provides you with a tax-free way to pay for current and save for future medical expenses such as physician visits, prescription drugs, and more.
To qualify for a HSA, you:
- Cannot be claimed as a dependent on someone else’s tax return.
- Cannot be covered under another health insurance plan, including Medicare coverage (with certain exceptions).
- Must be enrolled in a high-deductible health plan (HDHP) that does not cover all medical expenses.
- Contributions are pre-tax or tax-deductible and are not limited by your income; so, regardless of your earnings, you can open an account if you meet the qualifications (annual contribution limits apply).
- All earnings are tax-free, compounding to help your account grow over time.
- Withdrawals for qualified medical expenses are tax-free, and, at age 65, all nonmedical withdrawals are taxed at your current tax rate, similar to a Traditional IRA.
- A HSA is fully portable. Just as with your IRA, you own the account and can roll it over to another HSA custodian (subject to some restrictions).
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