A health savings account (HSA) is an individually owned, tax-favored account that allows consumers to pay for qualified health care expenses.

An HSA must be coupled with a high deductible health plan (HDHP) to receive the tax advantages allowed by the IRS. Premiums associated with an HDHP should be lower than a traditional plan, allowing employees to capture the savings to fund an HSA.

Similar to a 401(k) savings plan, individuals can make tax-deductible contributions into an HSA, and the account can earn interest tax free. HSA funds can be used for any qualified out-of-pocket medical expense. HSA funds are commonly used to pay deductible and prescription drug expenses. Once the deductible is met, the health plan begins paying some or all covered expenses, depending on the plan selected.

HSA benefits

The growing popularity of HSAs is fueled by the year-round benefits participants enjoy.

  • Funds deposited into an HSA can reduce income taxes, similar to money saved in a qualified retirement plan.
  • Combining an HSA with a qualified HDHP can lower insurance premiums.
  • Funds in an HSA grow tax-free, and the account belongs to the accountholder for life.
  • HSA funds can be withdrawn tax-free to pay for qualified medical expenses, many of which are not covered by traditional health insurance plans (dental visits, prescription drugs, eyeglasses, contacts, and chiropractor visits).

IRS sets annual HSA limits



Self-only contribution (employee + employer)


Family contribution (employee + employer)


HSA catch-up contribution (55 and over)


Self-only HDHP minimum deductible


Family HDHP minimum deductible


Self-only HDHP maximum out-of-pocket


Family HDHP maximum out-of-pocket


What’s new for 2022?

Who is HSA-eligible?

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