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So, what is an HSA? In short, it’s a health savings account (HSA) for people with a high deductible health plan (HDHP). Based on a survey by America’s Health Insurance Plans of United States health insurance companies, as of 2016 there are 20.2 million HSA/HDHP accounts. That’s up from 19.7 million in 2015. Popularity may be growing due to some of the benefits that come with owning an HSA.

One of the biggest pros of HSAs are the tax benefits. Contributions made to an HSA are tax deductible. If they are made through a payroll deduction, they are pre-tax which could lower your taxable income.  Any interest earned in the account is tax free. Wrapping up the tax benefits is the qualified withdrawals. Any withdrawal for a qualified medical expense is tax free.

The money in your HSA has the potential to grow. You may be able to utilize financial tools such as mutual funds, to try to increase the account value. The options available do vary depending on your account administrator. The good news is, if you don’t like your current administrator, you can move the account. HSAs are less restricting than a 401k so you have more options. Also, the interest earned is not taxed. Who doesn’t like free money?!

You know that old saying “use it or lose it”? That does not apply to HSAs. Regardless of who makes a deposit into your account, you or an employer, the money stays. It’s yours to decide when and how to spend it. Remember, qualified medical expenses are tax free. If you use the funds for anything other than qualified medical expenses, you will have to pay income tax on them as well as a 20 percent penalty tax.

These are just a few of the benefits that come with having a health savings account. As always, do your research and make sure that the financial tool is right for you and your family.