Health Savings Account

Moneybestpal Team

An HSA is a tax-advantaged account that can be used to cover certain medical costs. It is only accessible to people with high-deductible health plans (HDHP). 

Both the company and the employee may contribute money to the HSA, and it can be used to cover medical costs including deductibles, co-payments, and prescription costs.

An HSA has the advantage that donations are tax deductible and account balances grow tax-free. This implies that the funds can be utilized to cover medical costs without the associated income needing to be taxed. The account stays with the person even if they change jobs, and any unused monies can be carried over to the following year.

While they encourage consumers to be more involved in their healthcare decisions and shop around for the cheapest pricing, HSAs are frequently considered as a means to help people save money on healthcare expenses. Yet, they are also criticized for potentially pushing people to save more money and for helping higher-income persons who can afford to do so.

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