Health Savings Account (HSA)
What is an HSA?
HSA’s are individual savings accounts that pay for qualified health care expenses tax-free. To open an HSA, you must be enrolled in a qualifying high deductible health plan (HDHP). You decide how much you want to contribute to the plan each year up to a limit set by the IRS.
How does it benefit me?
- Reduces your insurance premiums and increases your take-home pay by decreasing taxes.
- Rolls over from year-to-year and stays with you even if you change employers.
- Earns interest tax-free.
- Pays for eligible health care expenses with an HSA debit card.
What else do I need to know?
- You must keep proper documentation of eligible expenses, like an Explanation of Benefits statement from your insurance company or receipt for over-the-counter medications.
- Ineligible withdrawals are subject to a 20% penalty tax.
- Once you have an account, you can stop, re-start or change your contribution amount at any time.