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

An HSA, or Health Savings Account, is a tax-advantaged savings account available to people enrolled in a high-deductible health plan. 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. Contributions reduce your taxable income, lowering your tax bill. The money grows tax-free through interest or investments. And withdrawals for qualified medical expenses are also tax-free. This triple tax advantage is rare among financial accounts. Unused funds roll over year to year with no expiration, and after age 65 you can withdraw for any purpose without penalty, making it function like a retirement account as well.