What is a Health Savings Account (HSA)?

It’s open enrollment time at many companies. Does your company offer a High Deductible Health Plan (HDHP)? If so, have you ever considered a Health Savings Account to help you pay for your out of pocket medical expenses?

A Health Savings Account (HSA) is similar to a Flexible Spending Account (FSA) in that it allows you to put aside pre-tax funds for qualified medical expenses. An HSA is exempt from taxes including federal income tax, FICA and (often) state income taxes.

The HSA 101

You must be enrolled in a qualified HDHP to have an HSA

Most accounts earn interest on savings

Your employer or family members can contribute to your HSA

Can be used for deductibles, co-pays and co-insurance

Can be used for over-the-counter products and medicines (require a prescription)

HSA money rolls over year to year

You may contribute up to the allowed maximum, adjusted for inflation each year

• 2013: $3,250 per person; $6,450 per family
• 2014: $3,300 per person; $6,550 per family

If you're 55 or older, you may contribute an additional $1,000.

How is an HSA different from the FSA?

HSA funds roll over whereas with an FSA your contributions much be used by end of year – or they are forfeited. You own the HSA so even if you change jobs or are no longer covered under an HSA-eligible HDHP, you can keep spending down your HSA or save it for future expenses.

Can I use an HSA at FSAstore.com?

Absolutely! Products that are eligible for FSAs are also HSA-eligible.