An HSA (or Health Savings Account) is a tax-advantaged savings account that belongs to you and is paired with a qualified high-deductible health plan (HDHP). You can make HSA contributions for the 2013 tax year until April 15, 2014. Maxing out the 2013 HSA limit set by the IRS will reduce the amount the employee pays in federal income tax.
2013 HSA Contribution Limits
|HDHP Minimum Deductible||HDHP
|HSA 55+ additional contribution amount|
Once deposited, all HSA contributions belong to the individual, regardless of who made the contribution. As such, any distribution and/or removal of funds from the HSA has to be authorized by the individual (not the employer). Many other requests related to the account (such as a request for a new debit card or request for an address change) can only be made by the employee.
Background on Health Savings Accounts
A Health Savings Account, or HSA, is a financial account established by an individual or family to pay for qualified medical expenses. U.S. federal regulations require you to have a minimum deductible on your health insurance plan in order to make tax-deductible contributions to a Health Savings Accounts (HSA).
HSAs combine the benefits of both traditional and Roth 401(k)s and IRAs for medical expenses. Taxpayers receive a 100% income tax deduction on annual contributions, they may withdraw HSA funds tax-free to reimburse themselves for qualified medical expenses, and they may defer taking such reimbursements indefinitely without penalties.