A health savings account (HSA) is a tax-advantaged medical savings account available to people enrolled in a high-deductible health plan (HDHP). The tax benefits of an HSA make it an attractive way to save for current and future medical expenses.
Benefits of an HSA
- Contributions are tax deductible
- Earnings grow tax-free
- Distributions are tax-free if used for qualified medical expenses
- Unused balances roll over year to year
- Balances can be invested
- Annual contribution limits apply