A Health Savings Account, or HSA, is a special type of savings account that lets you pay for medical expenses while also offering unique tax advantages. It can be a powerful tool for managing healthcare costs both now and in the future.

Health Savings Accounts are available to people who are enrolled in a qualifying high-deductible health plan (HDHP). Unlike other healthcare accounts, the money in an HSA belongs to you, not your employer or insurance company.

How Does an HSA Work?

An HSA allows you to set aside money specifically for eligible medical expenses, such as doctor visits, prescriptions, dental care, and vision expenses. You can contribute money to your Health Savings Account through payroll deductions or direct deposits, up to an annual limit set by the IRS.

The funds in your HSA roll over from year to year, which means you don’t lose unused money at the end of the year. You can use your HSA debit card to pay for qualified expenses, or reimburse yourself later if you pay out of pocket.

Another key feature is that HSA funds can be invested once your balance reaches a certain amount, allowing your savings to grow over time. This makes an HSA useful not only for current medical costs, but also a powerful tool for future healthcare expenses.

Benefits of an HSA

One of the biggest advantages of an HSA is the tax benefits they offer. Contributions are typically tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free. This is why you’ll often hear people say they offer a “triple tax advantage.”

HSAs also offer flexibility. There is no deadline to spend the money, and you can take the account with you if you change jobs or retire. After age 65, you can even use HSA funds for non-medical expenses, though those withdrawals may be subject to income taxes.

An HSA can be a way of planning ahead for rising healthcare costs while keeping more control over savings.

How Do You Open an HSA?

If you’re eligible to open an HSA, then you can create an account through your employer, a bank, or a dedicated HSA provider. Eureka Savings Bank offers enrollment with a minimum $50 balance.

The process is typically straightforward and involves completing an application and choosing how much you want to contribute. Once your account is open, you can start using it right away for use with qualified medical expenses.