How a health savings account (HSA) works
What is an HSA?
A health savings account is money you set aside in a tax-deductible savings account to help you pay for health care services, like a savings or checking account from a bank.
It works with a high-deductible health plan. You can use the account to pay for eligible expenses until the deductible is reached. It helps you save on health care and save for retirement.
Watch a video about how HSAs work
How does it work?
You must have an HSA-eligible, high-deductible health plan that works with the health savings account. The health plan can help you save with a monthly premium that’s generally lower than a plan with a lower deductible. Get a quote to see what it costs.
The deductible is the amount you pay for eligible expenses before your health plan begins to pay. Generally, there’s a financial tradeoff – the premium is lower because the deductible is higher.
That’s where the HSA comes in. You use the pre-tax money you’ve contributed to the HSA to pay for care until you reach your deductible. See how a health plan and HSA work together.
Why consider an HSA?
It can save you money on your family’s health care. See an example of tax savings.
- You put tax-deductible money into your HSA, which reduces your taxable income – so your taxes are lower.
- Withdrawals for qualified health care expenses are never taxed.
- You earn tax-free interest on the money in your account. Plus, your account may come with a variety of investment options.
- You don’t lose the money in your account at the end of the year. It’s yours to spend, save, earn interest and invest for the future, even your retirement.
