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Health Savings Accounts
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The health savings account (HSA) is a tax advantaged savings plan (a financial account with various restrictions) available to taxpayers in the US to cover medical expenses. It allows funds to be put into a qualified account before taxes are paid on it and then to withdraw the money tax free for qualified medical expenses. The "health savings account" is the new name for the medical savings account (MSA) plans that were previously offered.
To be eligible for an HSA, a person must be covered by a High Deductible Health Plan (HDHP). The premium for a HDHP generally is less than the premium for traditional health care coverage. Money saved on insurance premiums might be put into the Health Savings Account, or used for other purposes.
HSAs differ in several ways from MSAs. Perhaps their most significant difference is the ability of employers of all sizes to employ HDHPs and HSAs as health benefits options for employees. MSAs were limited to employers who employed 50 or fewer people. That change is important, because employers are the sponsor of health benefits for most people in the US.
