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What is a Health Savings Account (HSA)?

Health Savings Accounts (HSA) were passed into law in 2003 and became effective January 1, 2004.  They were created to lower overall healthcare costs without compromising quality and choice in your medical care.  Simply put, an HSA is a tax-deferred, private savings account designed to pay for current and future medical, dental, vision, alternative, and preventative expenses with tax-free money.  See Qualified HSA Expenses.

The health savings account works only in tandem with a High Deductible Health Plan (HDHP).  An HDHP covers serious injury or illness once your deductible is met.

The concept is simple:  Lower your insurance premiums and use the savings to fund your HSA to pay for medical and preventative expenses with tax-free money, while lowering your taxable income and saving tax-deferred for retirement!  


 

HSA BENEFITS AND FEATURES:

  • Available to employers (all sizes) or individuals
     
  • You own your health savings account and have complete control over its assets
     
  • Health savings accounts are portable - they follow you, not your job or insurance 
     
    • Even if you lose your health insurance you can continue to pay for qualified medical and preventative expenses tax-free from your HSA
       
  • Simple to use - no claims review, just keep your receipts
     
  • With tax-free HSA funds, you control your healthcare decisions
     
  • Pay for qualified HSA medical expenses such as: prescription medications, over-the-counter drugs (with prescription), medical supplies, vision and dental costs, etc. 
     
    • Although your insurance plan may not cover some of these expenses, you can still pay for them with tax-free dollars
       
  • What you don't spend rolls over year after year earning tax-deferred interest
     
    • This interest is not considered taxable income
       
  • Preventative coverage & long-term care can be paid tax-free from your health savings account
     
  • Provides tax benefits & retirement options for employers, employees, and individuals
     
  • Similar to the idea of a medical IRA: 
     
    • Health savings accounts can provide an additional retirement vehicle, and at age 65 you can withdraw funds for any reason without penalties
       
  • Lower your insurance premiums while maintaining the security of quality major medical coverage
     
  • Lower administration costs: 
     
    • Health savings accounts are not subject to ERISA
       
  • Self-substantiation:
     
    • Section 105 claims reviews not required
       
  • Rollover options: 
     
    • One-time funding of health savings account allowed from your IRA
       
    • Rollover allowed from your MSA or other health savings account