Like its precursor MSA, or Medical Savings Account, the HSA is a two-component health plan consisting of a tax-deductible, high deductible catastrophic health insurance plan, and a tax-free claims expense reimbursement and tax-deferred savings plan.

Reimbursements from the savings plan account, for those expenses deemed eligible (as defined under a more liberal and far broader federal definition) are received 100% tax free, while all other withdrawals are taxable as ordinary income with an added penalty when taken prior to age of 65. Simply stated, the HSA is just the permanent expansion of the former MSA, but with several very meaningful enhancements.

HSA Savings Account Benefits:  Used to meet your deductible •  Tax deductible off of gross income •  Grow tax deferred •  NEVER taxed when used for qualified medical expenses •  Roll over year after year — no “use it or lose it” •  Portable, also goes with you •  Health premiums when you’re between jobs •  Qualified long-term care premiums •  Health premiums after age 65 (but NOT Medicare supplements) •  Living expenses — after age 65 — pay ordinary income taxes

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