Health savings accounts (HSAs) are a growing trend in health care. An HSA is a tax-exempt savings account established for the purpose of paying for the qualified medical expenses of an individual and/or his or her spouse and tax dependents. HSAs are designed to provide eligible individuals with the following federal tax benefits:
HSA contributions are tax-free.
Interest and other earnings on HSA contributions accumulate tax-free.
Amounts distributed from an HSA for qualified medical expenses are tax-free as well.
In addition to tax benefits, individuals covered under an HSA are more likely to seek preventive care, choose generic drugs, not misuse the emergency room, and use online tools to research health care providers.
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