HSA (Health Savings Account)
A tax-advantaged savings account, available only to people enrolled in a qualifying high-deductible health plan, used to pay for eligible medical expenses.
An HSA lets an employee (and their employer, if the employer chooses to contribute) set aside pre-tax dollars specifically for qualified medical expenses. Unlike an FSA, HSA funds roll over year to year with no “use it or lose it” deadline, and the account belongs to the employee even if they leave the company.
Eligibility requirement: an HSA can only be opened and contributed to by someone enrolled in an HSA-eligible high-deductible health plan (HDHP) — it’s not a standalone benefit you can offer on its own.
Why employers pair it with an HDHP: HSA-eligible plans typically carry lower premiums than traditional plans, and employers often contribute a portion of the deductible into employees’ HSAs to soften the higher out-of-pocket exposure — a combination often marketed as a “consumer-directed health plan.”
Triple tax advantage: contributions are tax-deductible (or pre-tax through payroll), growth is tax-free, and withdrawals for qualified medical expenses are tax-free — a feature not shared by an FSA.
Have questions about how this applies to your renewal?
Talk to a group health insurance broker who specializes in your situation.