Health Savings Account (HSA)
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What is a Health Savings Account?
| A Health Savings Account (HSA) is a tax-advantaged personal savings account designed to provide funds to pay qualified medical expenses, including health insurance deductibles and co-payments. An HSA is available to eligible individuals only in conjunction with a high-deductible health plan provided by an employer or purchased by an individual. |
| The tax benefits of an HSA are significant. Your contributions to a Health
Savings Account are tax deductible on an "above the line" basis, resulting in a dollar-for-dollar reduction in adjusted gross income. What might this mean to
you? For example: |
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| If your employer contributes to your HSA, those contributions are not taxable income to you and are not subject to withholding. |
| Funds in an HSA can be invested, with earnings not subject to income tax so long as they remain in the HSA. |
| Distributions from an HSA may be made at any time. If used to pay for qualified medical expenses, the distributions are not subject to federal income tax. If used for non-medical expenses, HSA distributions are considered taxable income to you and are subject to a %10 penalty tax if you are under age 65 when the distribution is taken. |
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