What is an HSA (Health Savings Account)?

A Health Savings Account (HSA) is indeed a tax-advantaged account specifically designed for medical expenses. This type of account allows individuals to set aside money on a pre-tax basis to pay for qualified medical expenses, which can include things like deductibles, copayments, and certain other health-related costs. Contributions to an HSA are tax-deductible, and any earnings in the account grow tax-free. Furthermore, withdrawals for eligible medical expenses are also tax-free, making HSAs a powerful tool for managing healthcare costs effectively.

The structure of the HSA promotes both savings for future healthcare needs and immediate tax advantages, highlighting its purpose as more than just a standard savings or checking account. This unique tax treatment is specifically aimed at encouraging individuals to save for healthcare costs, providing incentives for both current and future medical expenses.