What’s a Health Savings Account?

A health savings account (HSA) is a tax-advantaged medical savings account available to U.S. taxpayers enrolled in a High-Deductible Health Plan (HDHP). HSA deposits are made pre-tax and may be drawn at any time to pay qualified medical expenses without federal tax liability or penalty. Unlike company-owned health reimbursement arrangements, HSA accounts are owned by the individual. In addition, unused HSA funds can roll over from year to year and will accumulate on a tax-deferred basis. All funds eventually used for qualifying expenses may be withdrawn tax-free.

Is a HDHP right for you?

High Deductible Health Plans are best suited for people who expect to be on the low side of medical expenses. Review the details of your health plan to decide if a HDHP is a wise choice for your family.

If you do choose to participate in a HDHP, you should be saving to an HSA. Even families who can comfortably pay routine medical bills out-of-pocket find tax advantages to an HSA account.

What if I’m healthy and don’t use all the HSA money?

That’s OK. Your good health can turn your tax-free HSA deposits into a tax-deferred investment. In this situation, funds withdrawn for non-medical expenses will be taxed at ordinary income tax rates – just like withdrawals from an IRA or retirement plan. The caveat: non-medical expense withdrawals made before age 65 are subject to a hefty 20% penalty.

HSAs as a long-term savings strategy

It’s valuable to have a thought partner to recognize opportunities, assist with implementation, optimize outcomes and stay on top of tax law and policy changes. Partner with your advisor and tax professional to employ long-term savings strategies like this one.


Disclosure: SYM Financial Corporation (“SYM”) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM, including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.