The Medicare bill signed by President Bush on Dec. 8, 2003 created HSAs. Individuals covered by a qualified high deductible health plan (HDHP) (and have no other first dollar coverage) are able to open an HSA on a tax preferred basis to save for future qualified medical and retiree health expenses.
A medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account aren't subject to federal income tax at the time of deposit.
A Health Savings Account is a type of savings product that offers a different way for consumers to pay for their health care. HSAs are designed to encourage individuals to save money they may need for future health care expenses on a tax-free basis.
To be able to take advantage of HSAs, you must be covered by a qualified High Deductible Health Plan (HDHP). Because an HDHP generally costs less than what traditional health care coverage costs, the money saved on insurance can be put into the Health Savings Account.
People can sign up for Health Savings Accounts with banks, credit unions, and insurance companies, and sometimes their employers. The IRS has more information on the tax benefits and consequences of HSAs.
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