Retirement & Savings

What Is an HSA?

A health savings account (HSA) is a US tax-advantaged account for people enrolled in a qualifying high-deductible health plan. Contributions are pre-tax or deductible, the balance can grow tax-free, and withdrawals for qualified medical expenses are also tax-free, which is often described as a triple tax advantage.

How an HSA Works

The account belongs to the individual and carries over from year to year; there is no requirement to spend it by year-end. Annual contribution limits are set by the IRS for self-only and family coverage, with an extra catch-up amount for people 55 and older.

Non-Medical Withdrawals

Withdrawals for non-medical purposes before age 65 are subject to income tax plus a 20% additional tax; after 65, they are taxed as ordinary income without the additional tax.

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🔗 Related Terms

401(k) Plan Traditional IRA Emergency Fund

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.