Health savings accounts help cover medical costs with three tax perks: deductible or pretax contributions, tax-free investment growth, and tax-free qualified withdrawals.
In the US, only people with high-deductible health plans can contribute, and they generally cannot have other coverage, Medicare enrollment, or dependent status.
Qualified expenses can include doctor visits, dental, vision, prescriptions, bandages, and some disability-related costs, while vitamins, gym memberships, and most premiums generally do not qualify.
Contributions can come through payroll or after-tax deposits, may lower taxable income, and employer money counts toward the annual cap but stays with workers.
Health savings accounts can also support retirement planning because, after age 65, nonmedical withdrawals avoid penalties, though ordinary income taxes still apply to them.
