HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
- Available to any adult who is covered by a high-deductible health plan (and has no other first-dollar coverage)
- Amounts contributed to an HSA belong to the account holder and are completely portable
- Funds in the account can grow tax-free through investment earnings, just like an IRA
- Tax-advantaged contributions can be made in three ways:
- The individual or family can make tax deductible contributions to the HSA even if they do not itemize deductions;
- The individual’s employer can make contributions that are not taxed to either the employer or the employee
- Employers sponsoring cafeteria plans can allow employees to contribute untaxed salary through salary reduction.
- Individuals age 55 and older are allowed to make additional catch-up contributions
- Funds distributed from the HSA are not taxed if they are used to pay qualified medical expenses.
- Unlike Flexible Spending Arrangements that are forfeited if not used by the end of the year, unused funds remain available for use in later years.
- Click here to learn more about the basics of HSAs.
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