WHAT IS A HEALTH SAVINGS ACCOUNT (HSA)?
A health savings account (HSA) is an IRA-like account funded with pretax dollars that grow tax-deferred. The HSA assets may serve a dual purpose:
- tax-free and penalty-free distributions can be taken to pay for medical expenses, and
- penalty-free (but not tax-free) distributions can be taken for any reason starting at age 65. (HSA assets not used for medical expenses become retirement assets)
WHO IS ELIGIBLE FOR HEALTH SAVINGS ACCOUNTS?
- Are not covered by any other non-HDHP health plan, such as a spouse’s plan, that provides any benefits covered by your HDHP plan.
- Are not enrolled in Medicare.
- Do not receive health benefits under TRICARE.
- Have not received Veterans Administration (VA) benefits within the past three months.
- Are not claimed as a dependent on another person’s tax return.
- Are not covered by a general purpose health care flexible spending account (FSA) or health reimbursement account (HRA). Alternative plan designs, such as a limited-purpose FSA or HRA, might be permitted.