What is a health savings account?

An HSA is a tax-sheltered trust account you own for the purpose of paying qualified medical expenses for yourself and family. Once there is an enrollment in an HDHP (High Deductible Health Plan), the health plan decides eligibility for the HSA. Individuals who do meet the specific qualifications required may the deposit money into the account either by themselves, an employer, or anyone else on their behalf. The combination of the two provides financial protection against high medical expenses.

A health savings account is an alternative to obtaining traditional health insurance coverage. It allows for consumers to pay for their health care. A health savings account is a medical savings account which is 'tax-advantaged'. The funds that are contributed to this savings account are not subject to any federal income tax at the time of the deposit. These funds can be used to pay for medical expenses at any time without generating a federal tax liability.

The HSA plan when combined with a high deductible health plan (HDHP) provides flexibility over how your health care money is spent.