Health Savings Accounts are savings accounts that allow individuals to pay for qualified out-of-pocket medical expenses using pre-tax dollars. Unlike more traditional health care accounts, the funds in an HSA belong to the individual, not the employer or the insurance company, and travel with the individual. In order to take advantage of this tax deferred savings benefit, individuals must purchase a specific type of health insurance coverage called a High Deductible Health Plan (HDHP).
Health Savings Account
A HDHP is a different type of health plan. Under an HDHP individuals are covered for large expenses and pay for their day-to-day expenses, usually up to the amount of the deductible. Preventive benefits are eligible to be paid without being subject to the deductible. All other expenses including prescriptions apply to the deductible first.