Think of a Health Savings Account as a Medical IRA. The similarities include:
- Your deposits are tax-free and your money grows tax-free.
- You decide how to invest and grow your money.
- You can withdraw funds anytime for qualified medical expenses tax-free.
- When you reach age 65, you can withdraw your money without penalty and use it for whatever you want (taxes will still apply if the expense is not a qualified medical expense).
To be eligible for a Health Savings Account, you must:
- First enroll in a high-deductible health plan
- Not be covered by an other non-HDHP benefit plan
You are not eligible for a Health Savings Account if:
- You are claimed as a dependent on someone else’s taxes
- If you are covered by any other health plans that are not considered HDHPs, including Medicare and Flexible Spending Accounts