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An HSA is a catastrophic health insurance plan that is normally 20% or more less in cost than a PPO plan. These programs offer a tax-free way to assist in paying for current or future medical expenses. You would pay (the discounted rate) for visits to the doctor for colds, the flu, etc. but if you had anything performed that was preventative, it would be paid at 100%...no deductible, no co pay, etc. Plus, medications, doctor visits, lab work, X-rays, etc. go towards the deductible and once that's met, then the plan will pay 100%.
In the funding portion of the HSA, any (optional) contributions are tax deductible, it grows tax free in the account, and there are no penalties or taxes when withdrawn (for medically qualified expenses). Plus, unlike a Flexible Spending Account (FSA) the HSA account rolls over year after year. If you have money in the HSA when you reach 65, you can take it out for any reason and not be penalized. Or, use the money to pay for a Long Term Care policy or a Medicare Supplement using “tax free” money.
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