A Health Savings Account, or HSA, is a personal savings account that allows you to set aside money on a pre tax basis to pay for qualified medical expenses. From doctor visits and prescriptions to everyday health items, the list of eligible expenses is broader than many people expect.
What is an HSA and Who Can Have One?
An HSA is available to individuals enrolled in a High Deductible Health Plan, often called an HDHP. If you are not enrolled in an HSA qualified plan, you can still keep and use an existing HSA, but you cannot contribute new funds.
How Do Contributions Work?
The IRS sets annual contribution limits, which may change each year. While contributions are capped, HSAs still offer flexibility.
Contributions can come from:
- You
- Your employer
- Family members
Many employers contribute funds directly into your HSA each pay period, and you can also add money yourself at any time.
If you contribute using after tax dollars from your personal account, you may still receive a tax benefit when filing your taxes. Be sure to keep records and consult a tax professional if needed.
Does Your HSA Ever Expire?
No. Your HSA belongs to you, not your employer. Funds roll over year after year, with no use it or lose it rule.
If you switch to a non HDHP plan, you can no longer contribute, but you can continue to use your funds for qualified medical expenses.
What Can You Use HSA Funds For?
HSA funds can be used for a wide range of expenses, including:
- Doctor visits and prescriptions
- Chiropractic care
- Mental health services
- Vision and dental care
- Over the counter medications
- Services like acupuncture or LASIK
Many retailers label items as HSA eligible, making it easier to identify qualified purchases.
An HSA offers a unique advantage. Contributions are pre tax, funds grow over time, and withdrawals for qualified expenses are tax free. Using your HSA effectively can help you manage current costs while preparing for future healthcare needs.