Health Savings Account
In U.S. banking terminology, the term Health Savings Account refers to funds deposited in a financial institution that gives United States citizens tax advantages if they are enrolled in a health plan with high deductibles. Funds deposited into a health savings account are not subject to U.S. federal income tax at the time of deposit.
For example, a health savings account is intended to aid U.S. based individuals covered by HDHPs or High Deductible Health Plans in the event that the account holder needs to pay for medical expenses that are not covered by their HDHP. Contributions to a health savings Accounts are generally made by the account holder’s employer and have a limit as to how much can be contributed per year. In addition to coverage by a HDHP, potential account holders must also be enrolled in Medicare or claimed as a dependent on someone else’s tax return. Contributions invested over time have a tax-free status and may be used to pay for most medical expenses.