A Health Savings Account is a tax-free account that allows employees to pay for certain qualified medical expenses. The money in this account will accumulate tax-free, meaning that the funds can be used at any time, regardless of the time of the deposit. In the event that an employee leaves his or her place of employment, he or she will be able to take his or her contributions in order to pay for healthcare. Not all employees will be eligible for a Health Savings Account – eligible employees must be enrolled in a High Deductible Health Plan (HDHP) and cannot be covered by any other health insurance plan. In addition to these restrictions, the enrollee cannot be eligible for Medicare and cannot be classified as a dependent on another person’s tax return. The funds in this account are usually made accessible via the employee’s Healthcare Flexible Spending Account (FSA).
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