HSA - Health Savings Account

A Health Savings Account allows individuals to pay for current health expenses and save for future qualified medical expenses on a pre-­tax basis. 

Funds deposited into an HSA are not taxed, the balance in the HSA grows tax free, and that amount is available on a tax free basis to pay medical costs. Your voluntary contributions to your HSA reduce your taxable income. 

• Your own HSA voluntary contributions are tax-deductible. Your own HSA contributions are either tax-deductible or pre-tax (if made by payroll deduction). 
• Interest earned on your account is tax-free
• Tax-free withdrawals may be made for qualified medical expenses
• Unused funds and interest are carried over, without limit, from year to year
• You own the HSA and it is yours to keep - even when you change plans or retire
• Your HSA is administered by a trustee/custodian

An HSA plan may save you money through lower health insurance premiums, tax savings, and money deposited in your account which can be used to pay your medical deductible and other out-of-pocket medical expenses in the current year or in the future.

Generally qualified medical expenses will be determined by the plan in conformance with FEHB law and Section 213. See IRS Publication 502 for a list of qualified medical expenses. Please note some insurance premiums cannot be paid for by HSA funds.

First, you must elect a high deductible health plan. Generally, once the plan receives your enrollment, the plan will mail you an information packet which includes forms for you to complete and return to the plan. When the plan receives the completed forms, the plan will notify its administrator of the HSA election. The HSA administrator will then set up your account and your health plan will deposit "premium pass through" payments into the account. 

Other options are available as well. Contact your bank and see if they offer the HSA account

HSA holders can choose to save up to $4,400 for an individual and $8,750 for a family (HSA holders 55 and older get to save an extra $1,000  – and these contributions are 100% tax deductible from gross income (for year 2026)