HSAs work much like IRAs as there are annual maximum contributions that can be made and can be deducted for tax purposes. Contributions are reported to the IRS annually and the account holder has until the tax filing deadline to make all contributions for the previous tax year. Rollovers can be done within 60 days from another qualified MSA (medical savings account) or HSA. Only one rollover permitted per 12 month period. Rollovers are not subject to annual contribution limits. Excess contributions can be withdrawn but must be completed before taxes are due.

HSAs are tax-exempt accounts set up by an individual or employer to pay eligible health care expenses including insurance policy deductibles, co-payments and other out-of-pocket medical expenses. An HSA must be established with a high deductible health plan (HDHP) so that the HSA is used to pay routine expenses.

The employer or individual should consult with their insurance agent for determination as to whether or not they have a HDHP and would qualify for an HSA.

HSAs allow employers and consumers to set aside funds on a tax-free basis to pay health care expenses, including expenses that may not be covered by traditional health insurance. Example: HSAs may be used for vision and dental services, prescription drugs, over-the-counter drugs, long-term care services and certain health insurance premiums in retirement.