Health Savings Account (HSA)

A health savings account (HSA) is an account that is only available to taxpayers in the United States and they have to be enrolled in a high deductible health plan (HDHP). This account allows you to save money in an account for future medical expenses. The minimum deductible amount for the HDHP is $1,100 or 2,200 for family coverage and the maximum deductible and other out-of-pocket expenses is $5,600 or 11,200 for family coverage (both of these amounts are annually). There is also a limit on how much contributions can be made into the HSA. The limit is $2,900 or 5,800 for family coverage and if you are 55 or older it is $900.

The HSA contributions are not subject to federal tax at the time of the deposits. Whatever funds are deposited roll over from year to year if they aren't used. HSA's are the responsibility of each individual instead of your employer. You may use the money out of your HSA for qualified medical purposes without being taxed federally. If the money is taken out for non-medical purposes, then you may incur penalties unless it is taken after retirement age.