Health Savings Account (HSA)
HSAs allow you to save for future medical expenses, work like a personal bank or investment account, allow tax-free contributions in most cases, and roll over unused dollars until you need them
HSAs work in conjunction with a qualifying High Deductible Health Plan (HDHP). An employee must be enrolled in a qualifying HDHP meeting certain legal and regulatory compliance in order to contribute to (but not necessarily use the funds from) an HSA. The dollars contributed to an HSA can come from either an employer, the individual employee, or both. The funds contributed to an HSA can be tax-free (if from an employer through a cafeteria plan); or tax-deductible if contributed by an individual. Regardless of who contributes the funds, however, the funds always belong to the individual from day one. If funds are withdrawn for eligible medical expenses, then those funds are tax-free.
