What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for medical expenses. It is available to people enrolled in a high-deductible health plan (HDHP). Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free. The account holder owns the HSA, and the funds in it roll over from year to year if not used. The funds can be invested, and any interest or investment earnings are tax-free when used for eligible medical costs. HSAs are portable, meaning they stay with the individual even if they change jobs or health plans.