How are health savings accounts (HSA) valuable to consumers?

Health savings accounts (HSA) are valuable to consumers for many different reasons. HSAs are tax-exempt accounts that allow you to save money to cover your medical expenses now and in the future. According to the Internal Revenue Service (IRS), an HSA account offers the following tax advantages.
  • You can claim a tax deduction for contributions you or someone else (other than your employer) make to your HSA even if you do not itemize your deductions on your annual tax forms.
  • Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
  • The money remains in your HSA until you use it. There is no "use it or lose it" provision with HSA accounts as there are with other types of medical expenses accounts.
  • The interest or other earnings on the money in the account are tax-free. 
  • You do not have to pay taxes on the money when you use it for qualified medical expenses.
  • Your HSA account is portable; it stays with you if you change employers or leave the workforce.
HSAs can also provide one strategic method for saving for retirement.  After age 65 the money in your HSA can be withdrawn and used for purposes other than covering your medical expenses at no penalty, although those withdrawals may be subject to income tax. 

Continue Learning about Health Savings Plans

Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.