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  How does an HSA work?
 
Legislation establishing Health Savings Accounts (or "HSAs") took effect on January 1, 2004. HSAs and HSA-compatible health insurance plans are becoming more and more popular. Here are the basics:
  • An HSA is a tax-favored savings account that may be used in conjunction with an HSA-compatible high deductible health insurance plan to pay for qualifying medical expenses.

  • Choosing an HSA-compatible health insurance plan may help you save money. Typically, the monthly premium on an HSA-compatible high deductible plan is less expensive than the monthly premium for a lower-deductible health insurance plan.

  • Contributions to an HSA may be made pre-tax, up to certain annual limits.

  • Funds in the HSA may be invested at your discretion. Unused funds remain in the account and accrue interest year-to-year, tax-free.

Not all high-deductible plans are eligible for use in conjunction with an HSA. For more details on HSAs, click here.
 
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