A tax-advantaged savings account available to individuals enrolled in a high-deductible health plan (HDHP). Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. HSA funds roll over year to year and are yours to keep even if you change jobs.
Related Terms
Deductible
The amount you must pay out of pocket before your insurance coverage kicks in. A higher deductible generally means a lower premium. For example, if you have a $1,000 deductible and file a $5,000 claim, you pay $1,000 and your insurer pays $4,000.
Premium
The amount you pay to an insurance company to maintain your coverage, typically billed monthly, quarterly, or annually. Premiums are determined by factors such as risk level, coverage amount, deductible, location, and claims history.
Out-of-Pocket Maximum
The most you have to pay for covered health care services in a plan year. After you reach this amount through deductibles, copays, and coinsurance, your plan pays 100% of covered services for the rest of the year. This cap protects you from catastrophic medical bills.