An HSA can be an interest-bearing health account used for qualifying medical expenses, with the IRS's maximum contribution limits set annually. The HSA can only be used with a qualifying high-deductible health plan (HDHP), traditionally known for lower premiums and high-deductibles. A qualifying HDHP has a minimum deductible and out-of-pocket maximum that is set annually by the IRS.
HSAs are owned by individuals (not employers) and can be transferred from job-to-job or institution-to-institution, similar to a 401(k) or IRA. Contributions are 100% tax-deductible (until the maximum contribution limit is reached), and HSAs are triple tax-advantaged (tax-deductible contributions, tax-free interest, and tax-free withdrawals for qualifying medical expenses).
Read more about HSAs.
Source: “About Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.” Internal Revenue Service, May 1, 2020. https://www.irs.gov/forms-pubs/about-publication-969.Updated: