A tax-advantaged account for medical expenses, available with high-deductible health plans.
A Health Savings Account (HSA) is a tax-advantaged savings account used to pay for qualified medical expenses. HSAs are available only to people enrolled in high-deductible health insurance plans (plans with deductibles of $1,600+ for individuals, $3,200+ for families). HSA contributions are tax-deductible (up to IRS annual limits: $4,150 for individuals, $8,300 for families in 2024), grow tax-free, and can be withdrawn tax-free for qualified medical expenses. Unlike FSAs (Flexible Spending Accounts), HSA balances roll over annually indefinitely, making them powerful long-term savings vehicles. After age 65, HSA withdrawals for non-medical expenses are subject to income tax but not the 20% penalty, effectively making them like traditional IRAs. HSAs are underutilized despite being one of the most tax-efficient savings vehicles available.