Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged account that allows you to save money for future medical expenses. HSAs are offered by many employers, and you can also open one on your own.

There are two main types of HSAs: employer-sponsored HSAs and individual HSAs. With an employer-sponsored HSA, your employer will contribute money to your account each year. You can also make contributions to your HSA, up to a certain limit. The contribution limit for 2023 is $3,650 for individuals and $7,300 for families.

With an individual HSA, you are responsible for making all of the contributions. The contribution limit for 2023 is the same as for employer-sponsored HSAs.

The money in your HSA can be used to pay for qualified medical expenses, such as doctor's visits, prescription drugs, and hospital stays. You can also use your HSA to pay for long-term care insurance.

There are no income limits for contributing to an HSA. However, you must have a high-deductible health plan (HDHP) in order to qualify for an HSA. An HDHP is a health plan with a deductible of at least $1,400 for individuals and $2,800 for families.

The money in your HSA grows tax-free. You can also withdraw money from your HSA tax-free to pay for qualified medical expenses. However, if you withdraw money from your HSA for non-qualified medical expenses, you will have to pay income taxes on the withdrawal, as well as a 20% penalty.

HSAs are a great way to save for future medical expenses. The tax advantages make them a very attractive option for many people. If you have an HDHP, you should consider opening an HSA.