Health Savings Account

A type of medical savings account that allows consumers to save for medical expenses on a tax-free basis. To qualify, applicants must enroll in a high deductible health plan. A high deductible plan usually means higher out-of-pocket expenses, but a lower premium. The funds contributed to the account are not subject to federal income tax at the time of deposit.

Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over from year to year if you don’t spend them.