What is an HSA?
The concept of HSAs combines an affordable qualified HDHP and a tax-favored HSA. The combination results in savings through lower healthcare premiums and a reduction in taxable income. The HSA grows tax-free, and if the HSA funds are used for eligible medical expenses, the account holder never pays taxes on those funds.
Before an HSA can be established, a qualified HDHP must be in place to cover the individual or family. The Internal Revenue Service (IRS) determines the guidelines for an HDHP each year. The current requirements of an HDHP are as follows:
