What is a health savings account & how does it work?

A health savings account allows you to save money on a pre-tax basis that later can be used to pay for qualified medical expenses. More commonly known as an HSA, this account has triple tax advantages: You can deduct the money that goes into the account during the year you make the contribution. The money grows tax-free.

Are health savings accounts tax-free?

Health savings accounts and flexible spending accounts offer two of the best ways to put aside money tax-free for health care expenses. A health savings account (HSA) offers the opportunity to build a stash of cash that can help you pay medical expenses for years or even decades. But not everybody is eligible for an HSA.

How do I pay for medical expenses with an HSA & FSA?

With an HSA and FSA, you typically either pay for your expenses with a debit card and the funds are directly debited from your account or you pay with your own funds and submit a receipt for reimbursement. Keep your receipts in case you must provide documentation of the medical expense you incurred.