What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a tax-free savings account that pairs a high-deductible health plan. Designed to reduce healthcare insurance costs for employers and employees, HSAs enable individuals to pay for qualified day-to-day medical expenses on a tax-favored basis. Contributions are tax-deductible and eligible distributions are tax-free. Funds not spent can carry forward to future years and be used penalty-free after age 65 for any purpose.