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Saving for your health today is investing in tomorrow.
A Health Savings Account (HSA) is a type of tax-exempt custodial account that helps people with qualified high-deductible health plans (HDHPs) save money for out-of-pocket medical expenses like doctor visits and prescriptions. Individuals can open an HSA on their own, through an employer or an eligible healthcare provider.
Employer contributions to your HSA may be excluded from your gross income. You can deduct contributions made by anyone other than your employer, as long as they don’t exceed the maximum annual contribution amount. Contributions remain in your account until you use them. The interest or earnings grow tax free and the distributions for qualified medical expenses are also tax free. Your tax advisor or legal professional can provide guidance if you have questions.
Once you have determined that you meet the eligibility requirements for an HSA, you, your employer, your family members, and any other person may contribute to your HSA.
Contribution limits and deductible requirements are set by the Internal Revenue Service (IRS) each year. There is a limit on the 'out of pocket' expenses that can be incurred during the tax year. You can reference the IRS Website to check limits and requirements. For guidance, contact your tax advisor or legal professional.
If you choose a health insurance plan with a high deductible, and you meet the criteria for pairing it with an HSA, you may have some questions about how it all works. To help you make the right choices for your health and your finances, here are answers to common questions about health savings accounts.