HSA FAQs – what you need to know about health savings accounts
Imagine saving money on health care expenses today while building a tax-free safety net for tomorrow. Health Savings Accounts (HSAs) are making that vision a reality for millions of Americans.
These accounts offer a flexible, tax-advantaged way to cover medical expenses and plan for the future – while putting patients in control. At a time when many Americans face rising health care costs, HSAs are a practical, empowering option to help families maximize their hard-earned dollars and reduce dependence on restrictive, one-size-fits-all systems.
Only 1 in 10 Americans qualify for an HSA. Find out how HSAs can give you more control over how you spend your health care money.
What is an HSA?
A Health Savings Account (HSA) is a personal, tax-advantaged savings account designed to cover qualified medical expenses. Unlike traditional insurance plans, HSAs give individuals direct control over their health care funds while offering a rare triple-tax advantage:
- Tax-free contributions: Deposits into an HSA are not subject to federal income tax.
- Tax-free growth: Funds in the account grow tax-free through investments, similar to an Individual Retirement Account (IRA).
- Tax-free withdrawals: Withdrawals for qualified medical expenses remain untaxed.
HSAs help Americans save on health care costs today while building financial security for tomorrow. Americans for Prosperity (AFP) champions these accounts because they expand individual choice and reduce government interference in health care.
HSA, FSA, and HRA: What’s the difference?
Health Savings Accounts, Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) are all designed to help individuals manage medical and health care expenses with tax advantages.
However, they differ significantly in terms of ownership, contribution sources, and investment opportunities.
Ownership and portability
- HSAs: Owned by the individual. HSA funds belong to you — no matter where you work. Unused balances roll over annually, so the account grows over time.
- FSAs: Owned by the employer. FSAs typically operate on a “use it or lose it” basis, meaning unspent funds may be forfeited at the plan year’s end. Some plans offer a grace period or allow a limited carryover, but these restrictions vary.
- HRAs: Employer-owned. HRAs are entirely controlled by employers, with limited flexibility for employees. Funds are generally not portable if you leave the company.
Contribution sources
- HSAs: Both individuals and employers can contribute, empowering workers to build their own savings. The IRS sets annual contribution limits.
- FSAs: Funded primarily by employee salary reductions, though employers may also contribute. The IRS sets annual contribution limits for FSAs.
- HRAs: Funded exclusively by the employer; employees cannot contribute.
Investment opportunities
HSAs stand out as a true long-term financial tool, offering the ability to invest funds in stocks, bonds, or mutual funds — similar to a 401(k) or IRA. In contrast, FSAs and HRAs are designed for short-term expenses and do not offer investment opportunities.
How do HSAs work?
HSAs offer unmatched flexibility and control over health care expenses. Both individuals and employers can contribute to an HSA within IRS-set annual limits, and the funds grow tax-free through investment options, making them valuable for immediate needs and long-term retirement planning.
Unlike employer-based plans, HSA funds roll over year to year and belong entirely to the account holder, even if you change jobs. They can also be used for a wide range of qualified medical expenses, including routine check-ups, eyeglasses, and dental care.
Expanding HSA access: a path to freedom and prosperity
Expanding access to HSAs is a key step toward a health care system built on freedom, choice, and individual empowerment.
Americans for Prosperity is championing policies that put patients first and leading the fight to:
- Raise contribution limits, allowing Americans to save more.
- Expand qualified expenses, ensuring families can access modern health care solutions
- Allow more health plans to qualify, eliminating unnecessary restrictions that prevent millions from using HSAs.
The vision is clear: a health care system where individuals — not bureaucrats — make the decisions. That means more choices, lower costs, and greater freedom to tailor health care to your needs.
This is not just about transforming health care; it’s about reigniting the American Dream by empowering people to take control of their financial and personal futures.
Ready to take control of your health care? Explore the benefits of HSAs and advocate for policies that promote choice and freedom. Join Americans for Prosperity in the fight for financial independence and a health care system rooted in empowerment and opportunity. Together, we can reignite the American Dream.
Visit personaloption.com to learn more about HSAs and other solutions for making health care more affordable.
