Pennsylvania Health Savings Accounts
A health savings account (HSA), is a tax-advantaged medical savings account available to anyone who is enrolled in a high deductible health plan (HDHP). The funds contributed to the HAS account are not subject to federal income tax.
HSA's are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated similarly to those of an IRA in that they may provide tax benefits if taken after retirement age, and they incur penalties if taken earlier.
Many believe that HSA's are an important reform that will help reduce the growth of health care costs and increase the efficiency of the health care system. This is because, HSAs encourage saving for future health care expenses, and allow the patient to receive needed care without a gate keeper to determine what benefits are allowed. The accounts also make health insurance consumers more responsible for their own health care choices through the required High-Deductible Health Plan.
HSA Eligible Medical Expenses |
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