What Is a Health Savings Account (HSA)?

Today we're going to unpack more about what a HSA aka Health Savings Account is. There is a lot of confusion on this topic that I've noticed over the years.

A Health Savings Account (HSA) is a tax-advantaged savings account you can use to pay for many qualified medical expenses. To open an HSA, you must use a bank or financial institution.

Then, to make the contributions tax deductible, you must be enrolled in a high-deductible health plan (HDHP). These true HDHP's can be hard to come by on the individual market (depending on the year). They typically have no copays and the plan doesn't really kick in until you hit a large deductible. That's okay though, since the design is to have it there to kick in after you've used up a lot of what you have saved up in your HSA account (and your HDHP premiums are usually lower because of this).

Contributions to your HSA are tax-deductible, the funds grow tax-free, and withdrawals for qualified expenses are also tax-free. So it's a triple tax savings, however you must be sure that you're enrolled in a true HDHP plan to take advantage of this. I've talked to many people that think they are in a HDHP plan when in fact they were just enrolled into a high deductible plan. The plan has to approved by the government as a true high deductible health plan, sometimes also called an HSA compatible plan, to truly work with an HSA.

HSAs offer a good level flexibility and control, especially for self-employed individuals looking to save on healthcare and reduce their tax burden at the same time. Funds roll over year to year and can even be invested, making HSAs a great tool for both short-term savings and long-term planning.

It's key to work with an expert like myself though to make sure you are enrolled in a plan that does allow you to use the triple tax advantage of an HSA. If you're considering a high-deductible health plan with an HSA or would just like more info, contact me at 615-579-7592 or joel@wellnessinsurance.info for expert help selecting the right coverage. And remember, working with me is no cost to you and does not affect your rates!