What is an HSA and how does it work?

A health savings account (HSA) lets you set aside money for qualified medical expenses with tax advantages, but only if you are enrolled in a qualifying high-deductible health plan. Unused funds roll over year to year and stay yours.

Who can open one

You must be enrolled in a qualified high-deductible health plan and not have other disqualifying coverage. Many employers offer HSAs, but you can also open one on your own.

The tax advantages

Contributions are typically pre-tax or tax-deductible, the money can grow tax-free, and withdrawals for qualified medical expenses are not taxed. That triple advantage is why many use HSAs for long-term health savings.

How the money is used

You can use HSA funds for deductibles, copays, prescriptions, and many other qualified expenses. Unlike a flexible spending account, the balance carries over each year and remains yours if you change jobs.

Frequently asked questions

＋ Who is eligible for an HSA?

You generally must be enrolled in a qualifying high-deductible health plan and not have other disqualifying coverage. Eligibility rules are set by federal law.

＋ What happens to my HSA if I change jobs?

The account is yours to keep. Unlike a flexible spending account, HSA balances roll over and follow you regardless of your employer.

＋ What can I spend HSA money on?

Qualified medical expenses such as deductibles, copays, and prescriptions. Using funds for non-qualified expenses can trigger taxes and penalties.

Educational content only — not legal, financial, or insurance advice. Requirements and pricing vary by state.

Saving for medical costs with tax advantages