Health Savings Account

A health savings account, or HSA, is an individual savings account to help individuals cover out-of-pocket medical expenses.

What is an HSA?

A health savings account, or HSA, is an individual savings account to help individuals cover out-of-pocket medical expenses. While HSAs are typically offered through an employer, anyone may open an HSA if they are enrolled in a high deductible health plan (HDHP). Per the IRS, HSAs may only be used to purchase qualified eligible items or pay for eligible medical expenses. HSAs never “expire,” as funds roll over year over year. Also, if you leave your place of employment, your HSA is fully portable, and you can retain the account for life. The amount you can save each year depends on if you have coverage for yourself only or you cover other family members too.

Why an HSA?

HSAs help fill the gap between your out-of-pocket expenses and full insurance coverage. If you have a $3,500 deductible, you might have to pay that much with your own funds if you have a hospital or emergency event. You will also pay outright for doctor visits, instead of the customary co-pay amount. Setting aside pre-tax funds in an HSA means that you’ll have that safety net to cover these expenses. And, you never pay payroll taxes on the money during contribution or taxes on it upon disbursement. You can use this money to pay for your deductible and any out-of-pocket costs. If you don’t use all the money, it stays in your account. Additionally, many people use their HSA as a means of funding medical costs into their retirement by taking advantage of the built-in investment feature and allowing their HSA to grow. You never forfeit anything in your HSA, and the account is yours if you leave your employer. Some employers even help you pay for your healthcare costs by contributing money to your HSA.

Calculate your potential tax savings

HSA Advantages

Tax-free

HSAs allow you to save pre-tax dollars for your healthcare costs. The amount contributed to your HSA is taken from your pay before payroll taxes are calculated, which can help you pay less in taxes.

Portability

HSAs are fully portable, regardless of your employer. If you leave for another organization, your HSA remains intact, with all the money you’ve contributed. You may always withdraw from it for qualified eligible expenses, and you may continue to contribute to it as long as you’re covered under a high deductible health plan (HDHP).

True savings account

As an individually owned account, the funds in your HSA do not forfeit at the end of the plan year and always belong to you. HSA optimizers may build their funds year over year to ensure they have money for medical expenses when they need them. Uninvested funds are FDIC-insured and gain interest over time.

Investment options

Once your balance reaches a specified level, you may invest* HSA funds, like you would in a retirement account. That provides you with the potential for your money to grow.

*Investments in securities through HSA investments are: Not FDIC Insured • May Lose Value • No Bank Guarantee