HSA (Health Savings Account)
An HSA is a tax-advantaged savings account for individuals with high-deductible health plans, offering triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
Exam Tip
HSA = triple tax advantage. Requires HDHP. Funds roll over and are portable.
What is an HSA?
A Health Savings Account (HSA) is a personal savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. It's only available to people enrolled in a High-Deductible Health Plan (HDHP).
Triple Tax Advantage
| Benefit | Description |
|---|---|
| Tax-deductible contributions | Reduce taxable income |
| Tax-free growth | Investments grow without taxes |
| Tax-free withdrawals | No tax on qualified medical expenses |
Eligibility Requirements
- Enrolled in an HDHP
- Not enrolled in Medicare
- Not claimed as dependent
- No other non-HDHP health coverage
2025 Contribution Limits
| Coverage | Limit |
|---|---|
| Individual | $4,300 |
| Family | $8,550 |
| Catch-up (55+) | Additional $1,000 |
HDHP Requirements (2025)
| Requirement | Individual | Family |
|---|---|---|
| Minimum Deductible | $1,650 | $3,300 |
| Maximum Out-of-Pocket | $8,300 | $16,600 |
Key Features
- Portable - You keep it even if you change jobs
- Rolls over - No "use it or lose it" like FSAs
- Investable - Can invest in stocks, bonds, mutual funds
- Retirement use - After 65, can use for any purpose (taxed as income)
HSA vs. FSA
| Feature | HSA | FSA |
|---|---|---|
| Requires HDHP | Yes | No |
| Rolls over | Yes | Limited ($640) |
| Portable | Yes | No |
| Investment option | Yes | No |
Study This Term In
Related Terms
Deductible (Health Insurance)
InsuranceA deductible is the amount a policyholder must pay out-of-pocket before the insurance company begins to pay for covered expenses.
Out-of-Pocket Maximum
InsuranceThe out-of-pocket maximum is the most you have to pay for covered healthcare services in a plan year, after which your insurance pays 100% of covered costs.
Coinsurance (Health Insurance)
InsuranceCoinsurance is a cost-sharing arrangement where the insured pays a percentage of covered medical expenses after the deductible is met, typically 20% with insurance paying 80%.