Health Savings Accounts

Health Savings Accounts

Introduction to Health Savings Accounts (HSA's)

As the name suggests, a Health Savings Account (HSA) is a special savings account set up by the employee for healthcare expenses. It is a tax-advantaged personal savings or investment account that individuals can use to save and pay for qualified health expenses, now or in the future. Paired with a qualified high deductible health plan (HDHP), an HSA is a powerful financial tool that empowers consumers to be more actively involved in their health care decisions.

However, unlike other financial savings vehicles (Roth IRA, Traditional IRA, 403(b), 401(k), etc.), an HSA has the unique potential to offer triple tax savings through:

  • Pre-tax or tax-deductible contributions to the HSA
  • Tax-free interest or investment earnings
  • Tax-free distributions, when used for qualified medical expenses

Contributions can be made by the employer, the employee/individual, or both. Tax-free withdrawals can be made to pay for qualified medical expenses incurred by the account holder, spouse, children and other dependents.

HSA's are also portable, which means that individuals keep their HSAs if changing jobs or becoming unemployed. Also, since the account is owned by the individual, there is no "use-it-or-lose-it" provision, like with a Flexible Spending Account (FSA). Instead, unused contributions roll over each year, with interest and/or investment earnings compounding on a tax-free basis, like an IRA or 401(k). HSA's offer the potential for long-term, tax-free savings that can be used for future medical expenses, such as Medicare premiums and certain long-term care expenses and insurance.

Any adult who is not already enrolled in Medicare and is covered by an HDHP (and has no other first dollar coverage except for preventive care) may establish an HSA. There are no income limitations.

Some HSA Uses:

  • Medical deductible expense
  • Vision care expense
  • Dental expenses
  • Chiropractic care expense
  • Over-the-counter medicine
  • Dependent's medical and pharmacy co-payment
  • Massage therapy-acupuncture
  • Long term care premiums
  • COBRA premiums

Note: The IRS prohibits an employee from participating in both an HSA and a Flex Benefits: medical (also called a Flexible Spending Account (FSA)) plan.


If you have questions about HSA's or Flexible Benefits contact Michelle Weber in Business Affairs at 553-2431.

HSA Frequently Asked Questions

Flexible Benefit Plan Eligible Medical Expenses.pdf

HSA contribution change form 2023.pdf