A Health Savings Account (HSA) is a savings account for medical costs that comes with tax advantages. To open and contribute to one, you need to be covered by an HSA-eligible health plan, which is a type of high-deductible health plan.

How the two work together

  • Your HSA-eligible plan is your health insurance. It usually has a lower premium and a higher deductible.
  • Your HSA is a separate account you open with a bank or HSA provider. You use it to pay for qualified medical expenses.

Why people choose them

  • Contributions are generally tax-deductible or made before taxes
  • The money can grow tax-free
  • Withdrawals for qualified medical expenses are tax-free
  • Unused money rolls over year to year, and the account stays yours if you change jobs or plans

Who can contribute

Generally, you must be covered by an HSA-eligible plan, have no other disqualifying health coverage, not be enrolled in Medicare and not be claimed as a dependent on someone else's tax return. The IRS sets yearly contribution limits.

Is it a good fit?

An HSA-eligible plan can work well if you're comfortable with a higher deductible and can set money aside. If you expect frequent care, a plan with a lower deductible may cost less overall.

We help you find HSA-eligible health plans. For questions about taxes or contribution limits, check IRS.gov or talk with a tax professional.