What is an HSA?

Established in 2003 by Congress, Health Savings Accounts (HSAs) are designed to help you save for qualified medical and retiree health expenses tax-free. The option of an HSA gives you greater control of how their health care dollars are spent, as well as a broader selection of physicians from which to choose. With an HSA, you enjoy tax reductions as well as lower health insurance premiums.

Health Savings Accounts are made up of two components: a qualified High Deductible Health Plan (HDHP) and an HSA Administrator. Together, these components can save you a great deal of money on healthcare.

HDHP's

Generally, HDHPs have lower monthly premiums than the average insurance plan, as their deductibles are much higher. The money saved on insurance costs can be put into an HSA to cover the higher deductible, after which your HDHP takes over.

An HSA Administrator is a financial institution that oversees your Health Savings Account.

Contribution limitations to an HSA are determined by the IRS and may be withdrawn at any time without penalty to pay for qualified medical expenses by check or ATM. Like an IRA, the account is yours - not your employer’s. It’s your money and you decide how to invest the savings within the HSA. However, your employer may make contributions to your HSA. Any money remaining in your HSA at the end of the year continues to earn interest in the HSA for future medical expenses.

For individuals age 55 and older, additional ‘catch-up’ contributions are allowed to encourage saving for health expenses after retirement. Once an individual enrolls in Medicare they are no longer eligible to contribute to their HSA.