This video gives an easy-to-understand explanation for a Health Savings Account as it relates to a health plan and its tax implications.
H.S.A. - HEALTH SAVINGS ACCOUNT
An HSA is a tax-advantaged medical savings account available to taxpayers enrolled in a HDHP (high deductible health plan).
H.S.A. definition from Healthcare.gov:
A medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account aren't subject to federal income tax at the time of deposit.
Funds must be used to pay for qualified medical expenses.
Important IRS Updates
11/11/14 UPDATE - THE INTERNAL REVENUE SERVICE ANNOUNCED THE FOLLOWING NEW BENEFIT PLAN LIMITS FOR 2015:
- 2015 HSA contribution limits are $3,350 for self-only coverage and $6,650 for family coverage.
- High deductible health plan deductibles are $1,300 for individuals and $2,600 for families.
- Out-of-pocket expenses cannot exceed $6,450 for individuals and $12,900 for families.