Health Savings Account - HSA

What is a 'Health Savings Account - HSA'

A Health Savings Account (HSA) is 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.

BREAKING DOWN 'Health Savings Account - HSA'

The Health Savings 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 , 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. High-Deductible Health Plan - HDHP

    A health insurance plan with a high minimum deductible that that ...
  2. Medical Savings Account - MSA

    A medical plan combining high-deductible medical insurance protection ...
  3. HSA Custodian

    Any bank, credit union, insurance company, brokerage or other ...
  4. IRS Publication 502: Medical And ...

    A document published by the Internal Revenue Service detailing ...
  5. Flexible Spending Account - FSA

    A type of savings account available in the United States that ...
  6. Medical Underwriting

    The process of assessing the risk associated with providing health ...
Related Articles
  1. Personal Finance

    HSA Contribution Limits in 2016

    Find out the 2016 contribution and out-of-pocket limits for health savings accounts and why HSAs are still viable options as health care plans.
  2. Retirement

    Don't Use Your HSA for Current Medical Expenses

    HSAs let people with high-deductible health plans pay out-of-pocket medical costs with tax-free money. But not using those funds may be a better idea.
  3. Personal Finance

    Pros And Cons Of A Health Savings Account

    A health savings account offers a way to save while paying for healthcare expenses.
  4. Retirement

    Your HSA: A Triple Threat Investment Tool

    Thanks to its unique tax advantages, a Health Savings Account may be the best retirement option you never knew you had.
  5. Financial Advisor

    Why HSAs May Trump 401(k)s for Retirement Savings

    In many cases, it makes a lot of financial sense to use a health savings account instead of a 401(k) plan to tuck money away for retirement. Here's why.
  6. Personal Finance

    High-Income Benefits From A Health Savings Account

    Health savings accounts are the only tax break offering triple benefits. Here's a look at how they work.
  7. Financial Advisor

    IRS Sets 2016 HSA Deduction Limits

    Contribution limits for HSA plans have increased slightly for 2016. Here's a breakdown of what they are and how they work.
  8. Financial Advisor

    HSAs and FSAs: How to Decide Between Them

    FSAs and HSAs are both excellent ways to help cover a portion of medical costs with pre-tax dollars. Here's how to decide between the two.
  9. Financial Advisor

    Forget 401(k)s: Put Your Next Savings Dollar Here

    A 401(k) might be the post popular option for retirement savings, but there is another lesser-known option that may make sense for many.
  10. Retirement

    This Is Why HSAs Appeal to High-Income Earners

    Health Savings Accounts are a good deal. But they're a better deal for some than for others. We parse how the plans work – and who benefits the most.
RELATED FAQS
  1. What are catch-up contributions for Health Savings Accounts (HSAs)?

    Learn about Health Savings Accounts (HSAs) and how an eligible individual of age 55 or older can make additional catch-up ... Read Answer >>
  2. What are the requirements to be able to contribute to an HSA?

    Health Savings Accounts (HSA) can be used by individuals covered by a high-deductible health plan to save for health care ... Read Answer >>
  3. How do I know if I qualify to open a HSA (Health Savings Account)?

    The Health Savings Account (HSA) was established as part of the Medicare Prescription Drug, Improvement, and Modernization ... Read Answer >>
  4. Who can make catch-up contributions to a Health Savings Account (HSA)?

    Learn about health savings accounts and who can make additional catch-up contributions to HSAs according to the U.S. Internal ... Read Answer >>
  5. Is there a way to transfer funds from my 401k into my HSA?

    Can I transfer further contributions, like a $150,000 lump sum from my 401k to my HSA? Three ye... Read Answer >>
  6. What are the Best Ways to Lower My Taxable Income?

    Paying taxes is an unavoidable obligation each year, but individuals and business owners can take advantage of various strategies ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center