Health Savings Accounts (HSAs) are a type of savings account that allows individuals to save money on taxes for qualifying medical expenses. They are typically associated with a high-deductible health plan (HDHP), which offers lower premiums, a higher medical deductible, and a higher limit on medical expenses than other types of health plans. An HSA should not be confused with health expense accounts, which employers use in Canada to provide health and dental benefits to their Canadian employees. Contributions to an HSA are made with pre-tax dollars, meaning that the money deposited into the account is not subject to federal income tax. This makes HSAs an attractive option for those looking to reduce their tax burden while also preparing for future medical costs.
Funds in an HSA can be used to pay for a variety of qualified medical expenses, including doctor visits, prescription drugs, and even dental and vision care. The funds in an HSA are portable, meaning that they can be used to pay for medical expenses regardless of where you receive care. This makes HSAs an ideal option for those who are self-employed or who switch jobs frequently. Additionally, any unused funds in an HSA roll over from year to year, allowing individuals to save up for larger medical expenses. HSAs offer a unique way to save money on taxes while also preparing for future medical costs. With the ability to use pre-tax dollars and the portability of funds, HSAs provide a great opportunity for individuals to save for medical expenses. For those looking to reduce their tax burden while also preparing for future medical costs, HSAs are an excellent option.
With the ability to use pre-tax dollars and the portability of funds, HSAs offer a unique way to save for medical expenses.