What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a type of savings account available in the state of Texas that provides tax benefits to help pay for medical expenses. A HSA allows individuals to save money on a tax-advantaged basis to pay for medical expenses such as doctor’s visits, prescription drugs, and other forms of health care. Individuals must be enrolled in a High Deductible Health Plan (HDHP) to qualify for a HSA in Texas. An HDHP is an insurance policy that requires the policyholders to pay for a certain level of medical expenses before the insurance company begins to pay. This deductible typically ranges from $1,400 - $6,900 for an individual and $2,800 - $13,800 for a family policy. In Texas, individuals can contribute up to $3,550 to an HSA in 2020, and a family can contribute up to $7,100. Money saved in an HSA accumulates over time and can be used to pay for eligible medical expenses. Interest earned on the account is exempt from federal taxes and can be used for qualified medical expenses tax-free. Additionally, the money saved in an HSA account is not subject to federal income taxes when it is withdrawn for medical expenses. HSAs provide individuals and families with a way to save for future medical expenses and can be used to pay for current medical expenses on a tax-advantaged basis. There are many benefits associated with HSAs, such as tax savings, budgeting flexibility, and the ability to save for the future.

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What is a Health Savings Account (HSA)?

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