The HSA is a triple tax-advantaged savings account.
Step 1 – you put money in tax-free. If you are an employee whose employer’s works with an HSA provider, this will be taken out as a pre-tax deduction every pay check. If you are an individual, you fund the account with your post-tax dollars and at the end of the year, you will get a tax form showing the total amount of contributions that you can deduct from your taxes.
Step 2 – you can earn interest on your money or even invest it. Any gains you make are tax-free.
Step 3 – you can withdraw your money at any point tax-free, so long as it is used for qualified medical expenses. See our abbreviated version of qualified medical expenses for more information or go directly to the source. Additionally, if you don’t use any of your money in a given year, it rolls over into the next. There is no “use it or lose it” feature. Lastly, its portable, meaning you can take it with you if you leave your employer.