Health Insurance HSA - What Is It?
Understanding Health Savings Accounts (HSA)
A Health Savings Account (HSA) is a tax-advantaged medical savings account for taxpayers enrolled in an HSA compatible, high deductible health plan (HDHP). The funds contributed to the account aren't subject to federal income tax at the time of deposit.
Please note with a high deductible health insurance, the monthly premiums are lower and your out-of-pocket cost is higher, so an HSA account helps you pay for some of this expense.
An HSA is owned by the employee and opened through their employer. Employers, the employee, or any third party, can contribute to this account tax-free, but there are different limits for individuals and for families, depending on the tax year. Unused funds will carry over to the next year. Funds from this account pay for the qualified medical expenses of the account holder, spouse, and/or dependents.
The main benefit of an H.S.A. is reduced health insurance monthly premiums and reducing the out-of-pocket health care expenses.
The Internal Revenue Service announces new HSA benefit plan limits for each year and posts it to their website.
A Health Savings Account (HSA) allows individuals and/or employers to contribute pre-tax dollars to pay for medical expenses not covered by health insurance policies. It's designed to be there as employees transition to different phases of life and as their spending and savings needs shift.
The bottom line is that HSAs can prove helpful in the overall strategy of reducing risk and cost, while still having protection when you need it most. As pointed out in Employee Benefit Adviser, HSA's can "...be rolled over from year to year, similar to a 401(k). And like other retirement savings plans, HSAs can reduce employees’ tax liability and help them save money for retirement."