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A Health Savings Account (HSA) supplements an existing high-deductible health insurance policy. According to HSAFinder.com, this kind of investment fund helps policy holders better manage their health care expenses while building extra financial security for themselves in the future.
Definition
HSAFinder.com defines an HSA as a means of saving money on health care while creating an investment fund for retirement. Account funds can go toward medical expenses as needed while the remainder can go toward post-retirement needs.
Opening an Account
Before opening an HSA, you must hold an HSA-eligible health insurance plan with an individual deductible of at least $1,150, according to Kiplinger.
Contributions
Kiplinger states that an account holder may contribute a maximum of $3,000 per year for an individual or $5,950 for families.
HSA vs. Flexible-spending Accounts
Kiplinger points out that flexible-spending accounts require annual expenditure of the entire fund while HSA funds roll over to the next year.
Considerations
If you spend any HSA funds for non-medical purposes before you reach the age of 65, you will pay a 10 percent penalty and income tax on the withdrawn money.
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