A Health Savings Account (HSA) is a tax-advantaged savings account that allows individuals with high-deductible health plans (HDHPs) to save money for healthcare expenses. Contributions to an HSA are made on a pre-tax basis, reducing taxable income. The funds in an HSA can be used for qualified medical expenses, such as doctor visits, prescription medications, and surgeries. The money in the account rolls over year to year and grows tax-free. HSAs provide individuals with more control over their healthcare spending and can also be used as a long-term savings vehicle for future medical costs. Contributions to an HSA are made by the account holder or employer, and the funds are portable, meaning they remain with the account holder even if they change employers or health plans.
