Since 2003, Health Savings Accounts (HSA) have supplemented health insurance by helping reduce out-of-pocket medical costs.
Supplement your high-deductible health insurance policy
Many employers offer high-deductible or catastrophic health plans because the monthly premiums are lower. With those plans, deductibles can be substantial for individuals or families, so pairing your insurance with this account helps you pay routine and unexpected medical costs without increasing your premium.
If you have a high-deductible plan, consider adding this account to your benefits. Funds in the account can be used for a variety of approved medical expenses, helping you cover your deductible and other eligible costs.
Pay for medical expenses
You may incur several medical costs in a year. Funds in the account can pay for expenses incurred after the account is established and that are related to diagnosing, treating, preventing, or mitigating illness or disease. Examples of covered expenses include acupuncture, prescription medication, and copayments.
The account cannot be used for non-medical items such as cosmetic surgery for purely cosmetic reasons, cosmetics or general grooming products, or other items purchased for general well‑being.
Reduce your tax liabilities
Contributions are often made before taxes when deducted directly from pay, and withdrawals used for eligible medical expenses are generally tax‑free. Many people elect payroll deposits so they save on taxable income while building a balance for medical costs.
Talk with a financial advisor or your tax professional for details about how these tax rules apply to your situation.
Accumulate funds and compare options
Unlike a flexible spending account (FSA), which typically requires you to use the money during the plan year or forfeit it, the balance in this account does not expire and can move with you if you change employers. If you work in a medical facility, you may also want to review options specific to your workplace, such as Medical Centers Insurance.
Because unused funds carry over, you can pay what you need now and leave the rest invested for future medical costs.
An account like this complements a high-deductible plan by covering deductible and other eligible expenses. Discuss your benefits with your Human Resources Department or talk to your agent as you set up or adjust your savings.
Frequently Asked Questions
Who is eligible to open this type of account?
Generally, people with a qualifying high-deductible health plan are eligible; specific eligibility rules vary by plan and employer.
What expenses are typically allowed?
Allowed expenses usually include doctor visits, prescriptions, certain therapies, and preventive care, while purely cosmetic procedures and general grooming items are not eligible.
Do unused funds expire at year-end?
No, unused funds in this account generally roll over year to year and can remain available if you change employers.
How do payroll contributions affect taxes?
Contributions made through payroll deductions are often pre-tax, which can lower your taxable income, and eligible withdrawals are typically tax-free.