A Health Savings Account (HSA) is a tax-advantaged account that can be used to pay for qualified medical expenses. It works with a high deductible health plan (HDHP), which is a health plan that has a high deductible. Here are some key features of an HSA:
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Tax benefits: You can save money in your HSA account before taxes, and withdraw it tax-free as long as you use it for qualified medical expenses.
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Qualified medical expenses: These include deductibles, copayments, coinsurance, prescriptions, dental care, and vision expenses.
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Ownership: HSAs are individually owned, rather than jointly owned, and can be used by the account holder and their dependents.
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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.
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Roll-over: HSA funds roll over year to year if you dont spend them, and may earn interest or other earnings, which are not taxable.
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Eligibility: You can enroll in an HSA-qualified HDHP during open enrollment or when you experience a qualifying life event.
By using pre-tax dollars in an HSA to pay for deductibles, copayments, coinsurance, and other qualified expenses, including some dental, drug, and vision expenses, you can lower your overall health care costs. However, you can contribute to an HSA only if you have an HSA-eligible HDHP.
