HSA – Health Savings Accounts

HSA – Health Savings Accounts

Video-How HSAs Work

HSA – Health Savings Accounts. An new approach to paying for health coverage now combines a means for working Americans to get health insurance and a savings plan combined in a very tax-efficient manner. Americans can now establish Health Savings Accounts (HSAs) to help pay for medical expenses today and into your retirement.

How will Health Savings Accounts work?


There are several components:

    • First, an individual must buy a high-deductible health insurance plan.
    • Second, the individual may fund a special savings account to pay for medical expenses.
    • Third, if the insurance is purchased through her/her employer, the premiums AND the savings can be paid for on a pre-tax basis; without paying Federal, State or Social Security taxes on those amounts.


Health Savings Accounts (HSAs) Advantages:

    • Control: You own the funds in your account from day one. You decide when and how to spend them.
    • Flexible funding: Your account can be funded through employer contributions, salary reduction and/or tax-deductible contributions. Unlike other types of tax-advantaged accounts, family members, or any other person, can make contributions to your account, as long as they meet IRS guidelines.
    • No more use-it-or-lose-it rule: Accumulate funds in your tax-exempt account. The funds are there when you need them—now or in the future.
    • Portability: Take your account with you wherever you go. The funds you accumulate can help you plan for retirement. From age 55 up to when you are enrolled in Medicare, you can make additional contributions to maximize your tax advantages and set aside the money you need.
    • Expanded use of funds: You can use your HSA dollars, on a tax-free basis, for all eligible medical expenses. You can also use your money for non-health expenses on a taxable basis.
    • Health premium coverage: Your HSA can be used to fund certain health coverage premiums (COBRA, long-term care and coverage while receiving unemployment compensation) in addition to out-of-pocket health expenses.


Fundamentally, there are two components:

    1. A high-deductible health insurance plan
    2. A savings account held in trust to pay for medical expenses.

Of course, nothing is completely simple! Learn what qualifies as a high-deductible health plan as well as ways to set up health savings accounts. Please contact us for a comparison to your existing traditional plan.

Health Savings Account Model

Health Savings Accounts
H.S.A. FAQ’s
All About H.S.A’s – US Treasury

The following IRS link http://www.irs.gov/pub/irs-pdf/p502.pdf itemizes non-reimbursed medical expenses which an H.S.A. or H.R.A. could be used for.


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