What is the difference between a Health Savings Account (HSA) and a regular savings account through a bank?

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What is the difference between a Health Savings Account (HSA) and a regular savings account that I might set up through my bank?



I presume that withdrawals from an HSA can only be made for health expenses, but if I am conscientious about saving for health expenses, is there any advantage from a financial perspective for keeping my money in an HSA, rather than a bank savings account?






united-states hsa savings-account







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    up vote
    2
    down vote

    favorite












    What is the difference between a Health Savings Account (HSA) and a regular savings account that I might set up through my bank?



    I presume that withdrawals from an HSA can only be made for health expenses, but if I am conscientious about saving for health expenses, is there any advantage from a financial perspective for keeping my money in an HSA, rather than a bank savings account?






    united-states hsa savings-account







    share|improve this question























      up vote
      2
      down vote

      favorite









      up vote
      2
      down vote

      favorite











      What is the difference between a Health Savings Account (HSA) and a regular savings account that I might set up through my bank?



      I presume that withdrawals from an HSA can only be made for health expenses, but if I am conscientious about saving for health expenses, is there any advantage from a financial perspective for keeping my money in an HSA, rather than a bank savings account?






      united-states hsa savings-account







      share|improve this question













      What is the difference between a Health Savings Account (HSA) and a regular savings account that I might set up through my bank?



      I presume that withdrawals from an HSA can only be made for health expenses, but if I am conscientious about saving for health expenses, is there any advantage from a financial perspective for keeping my money in an HSA, rather than a bank savings account?






      united-states hsa savings-account




      united-states hsa savings-account






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      asked 3 hours ago









      Thunderforge

      6632714




      6632714




















          1 Answer
          1






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          up vote
          4
          down vote













          Some high-level differences:



          • Contributions to an HSA are tax-free

          • Withdrawals for qualified medical expenses are tax-free

          • Contributions are limited to $3,400 per year for an individual ($6,750 for a family)

          • Employers can make contributions as well (they count toward the above limit)

          • You must have a high-deductible health plan, no supplemental health insurance, and not enrolled in Medicare.

          So if you qualify, the main benefit is a reduction in taxable income.






          share|improve this answer






















          • I assume that withdrawals are subject to tax too?
            – Thunderforge
            2 hours ago






          • 2




            Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
            – Kevin
            2 hours ago











          • @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
            – Kevin
            2 hours ago










          • @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
            – Upper_Case
            2 hours ago










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          1 Answer
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          1 Answer
          1






          active

          oldest

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          active

          oldest

          votes






          active

          oldest

          votes








          up vote
          4
          down vote













          Some high-level differences:



          • Contributions to an HSA are tax-free

          • Withdrawals for qualified medical expenses are tax-free

          • Contributions are limited to $3,400 per year for an individual ($6,750 for a family)

          • Employers can make contributions as well (they count toward the above limit)

          • You must have a high-deductible health plan, no supplemental health insurance, and not enrolled in Medicare.

          So if you qualify, the main benefit is a reduction in taxable income.






          share|improve this answer






















          • I assume that withdrawals are subject to tax too?
            – Thunderforge
            2 hours ago






          • 2




            Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
            – Kevin
            2 hours ago











          • @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
            – Kevin
            2 hours ago










          • @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
            – Upper_Case
            2 hours ago














          up vote
          4
          down vote













          Some high-level differences:



          • Contributions to an HSA are tax-free

          • Withdrawals for qualified medical expenses are tax-free

          • Contributions are limited to $3,400 per year for an individual ($6,750 for a family)

          • Employers can make contributions as well (they count toward the above limit)

          • You must have a high-deductible health plan, no supplemental health insurance, and not enrolled in Medicare.

          So if you qualify, the main benefit is a reduction in taxable income.






          share|improve this answer






















          • I assume that withdrawals are subject to tax too?
            – Thunderforge
            2 hours ago






          • 2




            Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
            – Kevin
            2 hours ago











          • @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
            – Kevin
            2 hours ago










          • @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
            – Upper_Case
            2 hours ago












          up vote
          4
          down vote










          up vote
          4
          down vote









          Some high-level differences:



          • Contributions to an HSA are tax-free

          • Withdrawals for qualified medical expenses are tax-free

          • Contributions are limited to $3,400 per year for an individual ($6,750 for a family)

          • Employers can make contributions as well (they count toward the above limit)

          • You must have a high-deductible health plan, no supplemental health insurance, and not enrolled in Medicare.

          So if you qualify, the main benefit is a reduction in taxable income.






          share|improve this answer














          Some high-level differences:



          • Contributions to an HSA are tax-free

          • Withdrawals for qualified medical expenses are tax-free

          • Contributions are limited to $3,400 per year for an individual ($6,750 for a family)

          • Employers can make contributions as well (they count toward the above limit)

          • You must have a high-deductible health plan, no supplemental health insurance, and not enrolled in Medicare.

          So if you qualify, the main benefit is a reduction in taxable income.







          share|improve this answer














          share|improve this answer



          share|improve this answer








          edited 49 mins ago

























          answered 2 hours ago









          D Stanley

          48.3k7146156




          48.3k7146156











          • I assume that withdrawals are subject to tax too?
            – Thunderforge
            2 hours ago






          • 2




            Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
            – Kevin
            2 hours ago











          • @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
            – Kevin
            2 hours ago










          • @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
            – Upper_Case
            2 hours ago
















          • I assume that withdrawals are subject to tax too?
            – Thunderforge
            2 hours ago






          • 2




            Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
            – Kevin
            2 hours ago











          • @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
            – Kevin
            2 hours ago










          • @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
            – Upper_Case
            2 hours ago















          I assume that withdrawals are subject to tax too?
          – Thunderforge
          2 hours ago




          I assume that withdrawals are subject to tax too?
          – Thunderforge
          2 hours ago




          2




          2




          Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
          – Kevin
          2 hours ago





          Contributions, growth, and withdrawals are all tax-free (except state income tax in CA, AL, and NJ, and some growth caveats in NH and TN).
          – Kevin
          2 hours ago













          @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
          – Kevin
          2 hours ago




          @Thunderforge no, contributions, growth, and withdrawals are all tax-free (federally and in most states, see the link I posted above)
          – Kevin
          2 hours ago












          @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
          – Upper_Case
          2 hours ago




          @Thunderforge Provided that the withdrawals are made for eligible medical expenses, there is no tax for doing so. But it is your responsibility to document the use of the withdrawal and assess any additional tax liability if it is not for an approved expense.
          – Upper_Case
          2 hours ago

















           

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