What are Health Savings Accounts and how do they work?

What are Health Savings Accounts and how do they work?

Health Savings Accounts (HSAs) are tax-advantaged accounts that allow you to save money for medical expenses. You can contribute pre-tax income, and the funds can be used for qualified medical expenses.

What are the tax benefits of using an HSA?

Contributions to an HSA are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.

Can I use HSA funds for non-medical expenses?

Yes, but if you withdraw funds for non-medical expenses before age 65, you'll face a penalty and income tax on the amount.

What happens to my HSA if I change jobs?

Your HSA is yours to keep, even if you change jobs. You can continue to use the funds for qualified expenses.

Are there limits on how much I can contribute to my HSA?

Yes, there are annual contribution limits set by the IRS. For 2023, it's $3,850 for individuals and $7,750 for families.