A Health Savings Account is a tax-advantaged account created for or by individuals covered under high-deductible health plans (HDHPs) to save for qualified medical expenses.
HSA can be offered with high-deductible health plans and are funded with pretax dollars. The money save in your health savings account can be used for qualified medical costs.
To be eligible for HSA, you must be enrolled in a high-deductible health plan (HDHP) and not claimed as a dependent on someone else’s tax return.
The HSA contributions are invested over time and can be used to pay for qualified medical expenses, such as medical, dental, and vision care and prescription drugs.
An HSA offers triple tax benefits, including tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified health care expenses.
For 2023, the maximum amounts are $3,850 for individuals and $7,750 for family coverage. You can add up to $1,000 more as a catch-up contribution, if you are age 55 or older.
Contributions have a 1 year vesting period and unused account balances at year's end may be carried over. HSA is portable, if employees change jobs, they can still keep their HSAs.