What is a Health Savings Account?
An HSA is a tax-advantaged account for the purpose of paying for eligible medical expenses. It is not an employer-sponsored health plan but rather an individually owned account. In most cases, it is usually established by and through an employer preferred HSA provider. An HSA allows contributions by the employer and employee.
The Benefits of Health Savings Accounts (HSA) include:
-You can claim a tax deduction for contributions made to your HSA.
-Contributions to your HSA made by your employee may be excluded from your gross income.
-Contributions remain in your account from year to year until you use them.
-Interest or other earnings on the assets in your HSA are tax-free.
Some of the Rules that Apply to Health Savings Accounts Include:
-In order to participate in an HSA, you must be a participant in a high-deductible health plan (HDHP).
An HDHP, at a minimum, must provide for a deductible of at least $1,400 for single individuals and $2,800 for participants with one or more covered dependents for 2021.
-The limit that you can contribute to an HSA for 2021 is $3,600 for single individuals and $7,200 for individuals with coverage that includes one or more covered dependents.