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A Health Savings Account, or HSA, is a financial account established by an individual or family to pay for qualified medical expenses.
U.S. federal regulations require citizens to have a minimum deductible of $1,250/year ($2,500 for families) on their health insurance from all sources (including HRAs) in order to make tax-deductible contributions to their Health Savings Accounts (HSA).
HSAs combine the benefits of both traditional and Roth 401(k)s and IRAs for medical expenses. Taxpayers receive a 100% income tax deduction on annual contributions, they may withdraw HSA funds tax-free to reimburse themselves for qualified medical expenses, and they may defer taking such reimbursements indefinitely without penalties.
HSAs are unique—“IRAs on Steroids”—with triple tax advantages:
Every U.S. taxpayer should have an HSA to save money for retirement healthcare expenses.
However, HSAs are not the optimal health benefit solution for employers, who:
The best way employers can achieve all three of these objectives is by using Health Reimbursement Arrangements (HRAs).
Why haven't we heard about this?