4 Benefits of a Health Savings Account (HSA)

If you’re enrolled in a High Deductible Health Plan (HDHP), a Health Savings Account (HSA) lets you set aside pre-tax dollars to pay for qualified medical expenses. Consider five valuable benefits of having an HSA account.

Five HSA Benefits¹

1. Tax Advantages

An HSA offers triple tax advantages:

• Pre-tax contributions: The dollars contributed to an HSA account are pre-tax, meaning taxes are not withheld from contributions.
• Tax-free distributions: As long as the funds are used to pay for a qualified medical expense, the distributions are tax-free.
• Tax deduction: You may be eligible to claim a tax deduction for contributions you make to your HSA.

2. Coverage for Spouse and Dependents

You can use HSA funds to pay for eligible medical expenses for your spouse and qualified dependents, even if they aren’t on your health plan.²

3. Eligible Dental and Vision Care

You can use HSA funds to pay for some products and services not typically covered by your health plan, including glasses, dental cleanings and fillings, over-the-counter medications, hearing aids and more.

4. Earned Interest

An HSA account may earn interest or other earnings, as you may be able to invest the funds in your account. Interest and other earnings are tax-free.

5. No Expiration

An HSA account is not a use-it-or-lose-it option. The funds roll over year after year. Even if you switch jobs, your account goes with you because it’s tied to you as an individual — not your employer.

Five Common Questions about HSAs

Learn more about HSAs with these frequently asked questions. Consider consulting with a tax professional to fully understand the potential tax advantages and eligibility requirements.

1. Do I qualify for an HSA account?

You can contribute to an HSA if you’re enrolled in an HSA-qualified HDHP and don’t have another disqualifying health plan, Medicare or a Flexible Spending Account (FSA), or other full-coverage health plans. You also can’t be claimed as a dependent on someone else’s tax return.¹

2. How much can I contribute to an HSA?

There are annual limits for HSA contributions for individuals and families. Use our HSA calculator to determine the maximum amount you’re allowed to contribute. You can also visit IRS.gov/publications/p969 for contribution limits and information about additional contributions.

3. Which medical expenses can I pay for with HSA funds?

See frequently asked questions about medical expenses.

4. Can I pay for monthly health plan costs with HSA funds?

HSA funds can be used to pay for Medicare premiums, but not for other health plan premiums.

5. What’s the difference between a Health Savings Account (HSA), Flexible Spending Account (FSA) and Health Reimbursement Arrangement (HRA)?

These accounts differ in many ways, including who can make contributions (the employee or employer), tax advantages, plan qualifications and more. View an HSA, HRA and FSA comparison chart to learn more.