A Health Savings Account (HSA) is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. HSAs are available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP) . The funds contributed to an HSA are not subject to federal income tax at the time of deposit. Some key features of HSAs include:
-
Tax advantages: Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
-
Qualified medical expenses: These include deductibles, copayments, coinsurance, and some other expenses.
-
High-deductible health plan: To contribute to an HSA, you must have a high-deductible health plan (HDHP) . For plan year 2022, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family.
-
Contribution limits: For 2022, if you have an HDHP, you can contribute up to $3,650 for self-only coverage and up to $7,300 for family coverage into an HSA.
-
Roll-over: HSA funds are automatically rolled over for future medical expenses or may be used to reimburse qualified expenses from prior years as long as the expense was qualified under an HSA plan at the time that the expense was incurred.
HSAs can be used to pay for qualified medical expenses at any time, but you may contribute to an HSA only if you have an HDHP. HSAs are also member-owned accounts that let you save pre-tax dollars for future qualified medical expenses.
