What is an HSA?

An HSA is an innovative approach to health insurance signed into law in December of 2003, made available January 1st 2004

An HSA plan has 2 components:

A qualified high deductible health insurance plan
An Individual Tax-exempt Trust (savings/investments)

The trust account is designed to pay for routine medical expenses/and or provide savings for the future. Money put into the account can be used either during the year or accumulated in the account. Allowable medical expenses are defined by the IRS, and are much broader than most insurance carriers (i.e. includes dental, vision). Individuals can deduct dollars contributed to the HSA account from their gross income, resulting in tax-free medical dollars. The account is similar to an IRA account, however it is for qualified medical expenses.

HSA premiums are lower than other fully-insured plans with co-pays.
In theory, the funding of the health savings account comes from the dollars not being spent on a plan which "pays" for the privilege of co-pays and lower deductibles.
By allowing individuals to keep the money in the account not used, the government reintroduces the consumer into the health insurance equation; creating an incentive to check bills, compare costs, and evaluate urgency/frequency of appointments.
The plan must meet certain criteria (see Do I need a certain type of Insurance Plan?)

What is an HSA?

General

Tax Advantages

Contributions

Medical Expenses

Coordinating Benefits

Comparing Other Consumer Driven Health Plans

Background

HSA Accounts

Cost Saving Strategies

Organizational Tips

Spreading the News

Promoting HSAs

Links