What is the primary purpose of a health Savings Account (HSA)?

The primary purpose of a Health Savings Account (HSA) is to save for future medical expenses while enjoying tax advantages. HSAs are specifically designed for individuals who are enrolled in high-deductible health plans (HDHPs), allowing them to set aside money on a tax-free basis to cover qualified medical expenses. Contributions made to an HSA are tax-deductible, the funds grow tax-free, and withdrawals for eligible medical expenses are also tax-free.

This structure provides a strong financial incentive for individuals to save for healthcare costs that may arise in the future, as well as to plan for potential healthcare needs in the short and long term. HSAs not only encourage saving but also empower individuals to take control of their healthcare finances, making them a valuable resource for managing rising healthcare costs effectively.