What is an HSA and Will it Benefit You?

Understanding Health Savings Accounts (HSA's)

A Health Savings Account 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.

With an HDHP, 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, employees, or any third party can contribute to this account tax-free.  The funds in this account are used to pay for the qualified medical expenses of the account holder, spouse, and/or dependents.

There are different limits for individuals and for families, depending on the tax year. Unused funds will carry over to the next year.

The main benefits of an H.S.A. are reducing:

  • health insurance monthly premiums

  • out-of-pocket health care expenses

  • employees’ tax liability (and helping them save money for retirement)

For more information, see "3 HSA Facts Employees Should Know"courtesy of BenefitsPro.com.


A Health Savings Account 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.

Every year, these benefit plan limits will change so be sure to check with your plan administrator, agent, HR department, or IRS.gov to get the current year's limits.

The bottom line is that HSA's can prove helpful in reducing risk and cost, while still having protection when you need it most. You can talk to your local small business insurance agent to learn if HSA's are a good strategy for you or your company.