A health savings account (HSA) is a way to save money for out-of-pocket medical expenses like doctor visits, dental and vision care and prescriptions. It offers tax advantages that allow you to keep more of your hard-earned money, plus you can use it now or save it to cover health care costs in the future.
You’re eligible for an HSA on your own or through your employer, as long as you participate in a qualified high-deductible health plan (HDHP). You’re not eligible for an HSA if you are:
- Covered by another health insurance plan, such as a spouse’s plan, that is not a qualified HDHP
- Claimed as a dependent on another person’s tax return
- Enrolled in Medicare benefits (if you are enrolled in Medicare and already have an HSA, you can continue to use the money in your account, but you cannot make new contributions to the account or open a new HSA)
An HSA can be used to pay for qualified health care expenses on a tax-advantaged basis, helping to reduce your total health care cost. Your unused HSA funds roll over from year to year, so you can also pay for your future qualified health care expenses on a tax-free basis. Because any contributions you make from your paycheck are made before tax is applied, your contributions also save you money by reducing your taxable income.
