What is Health savings accounts (HSA)?

Whether you're a beginner or an expert, you will find this Glossary useful.

Health savings account (HSA) is a tax-free account created for individuals who pay for qualified medical expenses and are covered by a High deductible health plan (HDHP) to save for medical expenses that HDHPs do not cover.

what-is-health-savings-accounts-hsa

Health savings account definition (HSA)

Health savings account (HSA) is a tax-free account created for individuals who pay for qualified medical expenses and are covered by a High deductible health plan (HDHP) to save for medical expenses that HDHPs do not cover. In order to be qualified for HSA individual can't be covered by other health insurance and can’t be claimed as a dependent on someone else’s tax return.

Health savings account in business

HSA allows employers and employees to contribute to a tax-deferred personal savings account which is used to pay smaller and routine medical expenses such as dental, vision and over-the-counter drugs.

Contributions are invested over time into the account by the employee or the employer, can be used to pay for qualified medical expenses and are limited to a maximum amount each year. Amounts are portable meaning that the money not spent would stay in the account and gain interest tax-free, remaining available for later years.

HSA types of tax-advantaged contributions

1. The individual and family members can make tax deductible contributions to the HSA even if the individual does not itemize deductions.

2. The individual's employer can make contributions that are not taxed to either the employer or the employee.

3. Employers with cafeteria plans can allow employees to contribute untaxed salary through a salary reduction plan.


Free Glossary of Human Resource Terms

Improve your HR vocabulary by learning the most important HR terms & Definitions

Download Now

2019 Guide for Buying a Recruiting Tool

Download this guide with useful advices for buying a recruiting software tool that will help you improve your hiring efforts.

Get the Guide
TalentLyft ATS

Your Hiring Teammate

TalentLyft is intuitive and simple recruitment software specialized for SMBs.
Try it free for 14 days!
No credit card required, unsubscribe at any time.