When you are covered by a high-deductible health plan, you can have a health savings account (HSA) to help pay for your medical expenses. Just like a regular savings account or an IRA, your health savings account belongs to you. It goes with you no matter where you work, and any unused money automatically rolls over from year to year.
Your HSA saves you on taxes three ways
- Any income you put in your health savings account is not taxed, so it lowers the income tax you pay.
- When your HSA earns interest, you don't have to pay taxes on the interest.
- When use your HSA to for qualified medical expenses, you don't pay taxes on what you take out.