What is an HSA and how does it save me money?

An HSA, or Health Savings Account, is a tax-advantaged savings account available to people enrolled in a high-deductible health plan (HDHP). You contribute pre-tax dollars to the account and use the funds to pay for qualified medical expenses like doctor visits, prescriptions, and dental care. It saves you money in three ways. First, contributions reduce your taxable income, lowering your tax bill. Second, the money grows tax-free if you invest it. Third, withdrawals for qualified medical expenses are also tax-free. This triple tax advantage is rare. Additionally, unused funds roll over year to year with no expiration, and after age 65 you can withdraw for any purpose without penalty, making it a useful retirement savings tool as well.