Health Savings Account - HSA

AAA

DEFINITION of 'Health Savings Account - HSA'

An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual's employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.

INVESTOPEDIA EXPLAINS 'Health Savings Account - HSA'

The HSA account has three major tax savings: the money contributed into the account is tax deductible, it grows tax free, and certain withdrawals are tax free if they are for qualified medical expenses. To qualify for an HSA account, you must have coverage from a high-deductible health plan and you must not be enrolled in Medicare or be listed as a dependent on another person's tax return.

RELATED TERMS
  1. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits ...
  2. Mac Crawford

    Former CEO, president and chairman of Nashville-based Caremark, ...
  3. Medicare

    A U.S. federal health program that subsidizes people who meet ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
  6. High-Deductible Health Plan - HDHP

    A health insurance plan that has a high minimum deductible, which ...
RELATED FAQS
  1. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  2. How do you calculate payback period using Excel?

    Each financial institution offers similar products for its banking customers, including savings accounts, certificates of ... Read Full Answer >>
  3. What formula can I use to calculate interest on interest?

    Use the compound interest formula to determine the amount of accumulated interest on the principal amount invested or borrowed. ... Read Full Answer >>
  4. What economic factors affect savings account rates?

    At a basic economic level, the interest rate set on savings account deposits is determined by the relationship between how ... Read Full Answer >>
  5. What is the rate of return I can expect on a savings account?

    Prior to the Great Recession, savings account rates offered by banks could typically be found in the 4 to 8% range, depending ... Read Full Answer >>
  6. How much money should I have in a savings account?

    Most financial advisers or budgeting experts recommend that individuals and households keep enough money in liquid savings ... Read Full Answer >>
Related Articles
  1. Retirement

    Job Hunting: Higher Pay Vs. Better Benefits

    Focusing on salary may be a mistake. Find out which benefits have the highest long-run payoff.
  2. Home & Auto

    Fighting The High Costs Of Healthcare

    If your employer is cutting medical benefits, a health savings account may be right for you.
  3. Budgeting

    A Pre-Retirement Checkup

    Are you on track to post-work bliss? We'll tell you how to find out.
  4. Home & Auto

    Selecting The Right Mix Of Insurance Benefits

    Choosing employee benefits involves weighing the probability you will need them against taxes and cost.
  5. Home & Auto

    How To Avoid Medical Debt

    Find out what you can do to avoid a financial meltdown when there's a medical emergency.
  6. Taxes

    Tax Deductions You May Be Missing

    Knowing the tax deductions you're entitled to can make or break your bank account.
  7. Taxes

    Increase Your Tax Refund With Above-The-Line Deductions

    Find out about these deductions and how you can use them to lower your tax bill.
  8. Options & Futures

    20 Ways To Save On Medical Bills

    Handy tips to cut the cost of hospital bills, co-pays, prescription drugs and more.
  9. Options & Futures

    How To Choose A Healthcare Plan

    HMOs? PPOs? CDHPs? We'll clear up the confusion so you can find the right coverage.
  10. Retirement

    Failing Health Could Drain Your Retirement Savings

    You may not be able to prevent illness, but it doesn't have to infect your savings.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center