An HSA or health savings account is a personal savings account that can be used only for qualified health-related expenses that aren't covered by your health insurance policy. The advantage of using an HSA rather than other funding is that money put into an HSA is not subject to U.S. federal income tax. HSAs have become very popular -- today, an estimated $51.4 billion is held in 23.4 million HSA accounts in the United States.
Qualifying health-related expenses run the gamut from prescription medications to guide dogs for the visually impaired, to fertility treatments, to ordinary doctor's office visits. IRS publication 502 provides the complete list of qualifying expenses. Costs not available for HSA reimbursement include cosmetic surgery, funeral expenses, and non-prescription medications.
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