What Are the Advantages of a Health Savings Account?

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If you’re shopping for health insurance, you may want to consider getting a high deductible health plan that you can pair with a health savings account, or HSA. When you use them together, they can help you save money to pay for current and future medical expenses.

What is an HSA?

An HSA is a type of bank account that lets you save money tax-free to pay for qualified out-of-pocket health care expenses — like copays and deductibles for doctor visits and prescription drugs. One of the advantages of a health savings account is that you can use HSA funds to pay for some services your health plan doesn’t cover.

Just like a traditional savings account, the money you put in an HSA earns interest, so it grows over time. You don’t pay taxes on the interest earned, and you have the option to invest a portion of the money in your HSA so it grows even more.

Do I Need a Special Type of Health Plan to Use an HSA?

Yes. To open and use an HSA, you must enroll in an HSA-qualified high deductible health plan, like our Independence Blue Cross Personal Choice^® EPO Reserve plans.

Is an HSA Right for Me?

Something to consider when choosing a high deductible health plan that you can use with an HSA is how often you use health care services. If you’re generally healthy and don’t go to the doctor often, an HSA-qualified health plan may be a good choice because your monthly premiums are lower. You can use the money you save in premiums to fund your HSA to help you pay for out-of-pocket costs when you need care.

How Does an HSA Help Me Save Money?

First, you save because an HSA-qualified high deductible health plan, like one of our Personal Choice EPO Reserve plans, offers lower monthly premiums. When you open and use an HSA with a HSA-qualified health plan, there are triple tax advantages:

You pay no taxes on money you contribute to the HSA.
Money you withdraw to pay for qualified health care expenses is not taxed.
Interest you earn on HSA funds is not taxed.

When your HSA balance reaches a specified amount, you can also choose to invest it for long-term growth.

Do “Use It or Lose It” Rules Apply to Money in an HSA?

No! Unlike other types of health spending accounts, such as a flexible spending account (FSA), sometimes also called a flexible spending arrangement, “use it or lose it” rules don’t apply to an HSA. There is an annual limit on how much you can contribute an HSA, but if you don’t use all the money in your HSA at the end of your health plan’s benefit period, it rolls over year after year.