Health Savings Accounts (HSA)

What is a Health Savings Account (HSA)?
A Health Savings Account (HSA) combines high deductible health insurance with a tax-favored savings account. Money in the savings account helps pay the deductible. Once the deductible is met, the insurance starts paying. Money left in the savings account earns interest and is yours to keep.

 Some benefits of a Health Savings Account include:

Tax-deductible. Contributions to the HSA are 100% deductible (up to the legal limit) – just like an IRA.

Tax-free. Withdrawals to pay qualified medical expenses, including dental and vision, are never taxed.

Tax-deferred. Interest earnings accumulate tax-deferred, and if used to pay qualified medical expenses, are tax-free.

HSA money is yours to keep. Unlike a Flexible Spending Account, unused money in your HSA isn’t forfeited at the end of the year; it continues to grow, tax-deferred.

Why High Deductible Health Insurance?

To get the benefits of an HSA, the law requires that the savings account be combined with high deductible health insurance. High deductible health insurance costs less than traditional $250 or $500 deductible coverage, because the insurance company doesn’t have to process and pay claims for routine, low-dollar medical care.

What are the benefits of an HSA?

High Deductible Health Plan:

  • Costs less than more traditional co-pay plans
  • Provides quality health insurance

HSA Savings:

  • Used to meet your deductible
  • Tax deductible off of gross income
  • Grow tax deferred
  • NEVER taxed when used for qualified medical expenses
  • Roll over year after year — no “use it or lose it”
  • Portable, also goes with you

HSA Savings Can Also Be Used For:

  • Health premiums when you’re between jobs
  • Qualified long-term care premiums
  • Health premiums after age 65 (but NOT Medicare supplements)
  • Living expenses — after age 65 — pay ordinary income taxes


Helpful HSA Links

United Healthcare HSA Educational Video

HSA Savings Calculator

HSA Future Value Calculator

HSA Center

Precise HSA tax effects depend on federal law.
We recommend that you see your tax advisor for specific tax advice.


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