A health savings account (HSA) is essentially a personal savings account reserved for health care expenses. In order to have an HSA, you must possess a type of health insurance called a High Deductible Plan. There are a number of benefits to having a health savings account.


  • Money deposited in the HSA is not taxed.
  • Your employer may contribute to the HSA, but you own and have control over the money in the HSA.
  • Unused money in the HSA rolls over to the next year.
  • You decide how much money to set aside for healthcare costs.


  • Hard to budget for the HSA because illnesses are unpredictable.
  • You are taxed on money you take out for nonmedical purposes.
  • It can be challenging to find money to set aside for the HSA.
  • Pressure to save money for HSA might result in not getting medical help when necessary.

Should I Use HSA’s

Health savings accounts are great if you are in good health because this will give you time to save up the money. Health savings accounts are also an option if you are good if you are nearing retirement. However, if you are someone who knows they may need serious medical care in the future or are not able to pay the high deductible than an HSA should be avoided.

Setting up an HSA

Your employer may offer an HSA, but if not, you can start an account on your own through a bank. To open an account you must be under the age of 65 and have a high deductible insurance plan. The high deductible health insurance must also be your only health insurance, although dental, vision, and long-term care insurance will not disqualify you from having an HSA.