What is a Health Savings Account (HSA)?
An HSA a tax-favored savings account that is used in combination with a high deductible insurance plan. The money in the account helps pay the deductible as well as any other eligible medical expenses—including coinsurance—that may not be covered by the plan once the deductible has been met.
An HSA is similar to an individual retirement account (IRA), because it too can be invested in a variety of investment vehicles, while accumulating tax-free interest. The advantage of an HSA compared to an IRA is that the funds from the HSA are not taxed when they are withdrawn to pay for qualified medical expenses.