Health Savings Account | HSA
A Health Savings Account (HSA) is an innovative approach to health care that involves two elements:
- A qualified high-deductible health plan
- An individual tax-exempt Trust (savings/investment)
Employees who are enrolled in a qualified high-deductible health plan can contribute money to their tax-exempt Trust from their gross income to use for qualified medical expenses. The money in an HSA is rolled into subsequent years, so participants can choose to either use the money in their HSA to pay for routine medical expenses or save the money in their HSA to provide for the future. An HSA functions in a similar way to an IRA; however, the money in the account is used to pay for qualified medical expenses.
In one year, the maximum annual amount a participant may contribute to an HSA is $3,400 for an individual and $6,750 for a family (in 2017). However, it is important to check with your employer regarding how much you can contribute, since an employer may decide to offer a lower annual maximum amount.