What is a Health Savings Account (HSA) and what plan must accompany it?

A Health Savings Account (HSA) is a tax-advantaged savings account available only to people enrolled in a High Deductible Health Plan (HDHP). Triple tax advantages: (1) Contributions are tax-deductible (or pre-tax through payroll); (2) Growth is tax-free; (3) Withdrawals for qualified medical expenses are tax-free at any age. Contribution limits in 2024: $4,150 individual, $8,300 family, with a $1,000 catch-up for those 55+. HDHPs in 2024 had minimum deductibles of $1,600 individual / $3,200 family and maximum OOP of $8,050 / $16,100. HSA funds roll over year to year (no use-it-or-lose-it). After age 65, non-medical withdrawals are taxed as ordinary income without penalty. HSAs are popular for tax planning and retirement healthcare savings. FSAs (Flexible Spending Accounts) are similar but more restrictive and tied to employer plans.