A Health Savings Account/HSA is a tax-free savings account combined with a high deductible health plan. Established in November of 2003, Health Savings Accounts are similar to medical savings accounts (MSAs) without the restrictions or limitations.

Unlike medical savings accounts, HSA's are not limited to the self-employed or businesses with 50 or fewer employees. By contrast, HSA's allow anyone under the age of 65 who enrolls in a compatible "high deductible" health plan (HDHP) to make tax-free contributions. In addition, HSA's allow enrollees to contribute 100% of the deductible, which eliminates any post-tax expense . HSA's allow both the employer and employee to contribute to the same account in the same calendar year. HSA's are not part of a demonstration act and, therefore, are permanent and not restricted to the number of total enrollees.

Health Savings Accounts are similar to MSAs in that, they are 100% tax deductible, they are individually owned, they rollover from year to year and earn interest tax-free. Similarly, funds can be rolled into investment options, used to pay for medical expenses tax-free, and used to supplement income at retirement. As with an MSA, withdrawals from a Health Savings Account for non-qualified medical expenses will result in penalties and taxes.

Health Savings Accounts will revolutionize the way healthcare is provided in our country. They will restore the doctor-patient relationship, allow patients to become consumers of their own healthcare, be more affordable and receive unprecedented tax benefits. Health Savings Accounts are the future!

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