This HSA overview has been revised with information for 2023 & 2024 tax years. A few years ago, during my employer’s open enrollment period I switched from traditional PPO health insurance plan to a high deductible health plan (HDHP) coupled with a health savings account (HSA). Why? As someone young and healthy who rarely needs doctor’s appointments (knock on wood!), an HDHP provides lower premiums compared to traditional plans.
HDHPs were attractive due to the access they allowed me to an HSA that my employer contributed towards; HSAs are integral parts of HDHPs, so let’s go into more depth on what they are, their uses and contribution amounts as well as what medical expenses an HSA can pay for.
What Is an HSA? Health savings accounts, or HSAs, are tax exempt accounts that allow individuals to contribute tax-deducted funds that can then be used for qualified medical expenses. Many HSAs come equipped with debit cards that make managing payments and accounting simple.
Contrary to FSAs, you own your HSA and can take it with you when leaving an employer. And after turning 65, funds from an HSA can be used on any expenses without penalty – making HSAs my top pick as retirement accounts (though they’re often misinterpreted).
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