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If your company offers what's called a "High-Deductible Health Plan" (HDHP) or a health plan that meets certain deductible limits set by the IRS, then you are eligible to enroll in, and make pre-tax contributions to, a Health Savings Account (HSA). Think of it as a "Medical IRA" or a "Medical Individual Retirement Account" These innovative accounts are changing the way millions of people will be saving while still meeting their health care needs, as HSAs are portable and belong to the employee regardless of employer or even employment status.
HSA BASICS
HSAs provide employees a way to use tax-free funds to pay for current medical expenses and save for future qualified medical and retiree health expenses. In general, an HSA is a tax-exempt trust or custodial account created exclusively for the purpose of paying for the qualified medical expenses of an employee and his or her spouse and dependents. HSAs are subject to rules similar to those applicable to Individual Retirement Accounts (IRAs). Account holders can access HSA funds easily by using the HSA debit card to pay their portion of eligible out-of-pocket expenses at the Point-Of-Service.
HSA funds are not subject to any “use-it-or-lose-it” type losses. Should you have funds left in the account at year end or terminate employment, your HSA funds remain constant and completely portable. Balances earn interest and may be invested, offering HSA owners the ability to set aside thousands of dollars for later health care needs.
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Consumer-Directed Healthcare Administration Specialists