Global HR Glossary

What is a Health Savings Account (HFA)?

A Health Savings Account (HSA) is a tax-advantaged account available to individuals covered under a high-deductible health plan (HDHP). It allows for pre-tax contributions to be used for eligible medical expenses, including deductibles, copayments, and other non-covered healthcare costs. 

Benefits and Qualifications for an HSA 

HSAs offer three-fold tax savings: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses, with funds rolling over year to year. To qualify, individuals must be enrolled in an HDHP and meet IRS guidelines.

HSAs also feature investment opportunities that can significantly enhance their value over time. For effective use, individuals should maximize contributions and use the funds for qualified medical expenses to reap maximum tax benefits.