Health Savings Accounts (HSAs) are tax-advantaged medical savings accounts available to individuals who are enrolled in a Qualified High Deductible Health Plan (HDHP). HSAs are owned by the individual, unlike other types of benefit accounts such as Health Reimbursement Arrangements (HRAs) and Flexible Spending Account (FSA). HSA funds also roll over and accumulate year over year if not spent, with the ability to earn tax-free interest on the account. HSA funds may be used to pay for qualified medical, dental and vision expenses tax-free at any time.

With a high-deductible health plan, you have the security of comprehensive health care coverage. Like a traditional plan, you are responsible for paying for your qualified medical expenses up to the in-network deductible; however, the deductible will be higher, and you can use HSA funds to pay for these expenses. After the annual deductible is met, you are responsible only for a portion of your medical expenses through coinsurance or co-payments, just as with a traditional health plan. The deductible and maximum out-of-pocket expenses are indexed annually for inflation by the IRS and US Department of Treasury.

Above the line means you will reduce your taxable income regardless of whether you itemize or use the standard deduction on your income tax form. If you contribute to your HSA with after-tax dollars, you may deduct the contribution amount, subject to the maximum annual contribution limits from your taxes at filing time.

Both HSAs and FSAs allow you to pay for qualified medical expenses with pre-tax dollars. One key difference, however, is that HSA balances can roll over from year to year, while FSA money left unspent at the end of the year or after a designated grace period is forfeited. You may choose to use a Limited Purpose FSA to pay for eligible heath care expenses and save your HSA dollars for future health care needs. You may use Limited Purpose FSA dollars to reimburse yourself for expenses not covered by your high-deductible health plan, such as:

1. Vision expenses, including: Glasses, frames, contacts, prescription sunglasses, goggles, vision co-payments, optometrists or ophthalmologist fees, and corrective eye surgery
2. Dental expenses, including: Dental care, deductibles and co-payments, braces, x-rays, fillings, and dentures