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HSA stands for a health savings account and is tax-advantaged. It is funded by both employer and employee and has an annual limit.
To be eligible for a Health Savings Account, a person must have a high-deductible health plan that is HSA-qualified (HDHP). Employees may qualify for tax breaks via Health Savings Accounts, comparable to 401(k) plans and flexible spending accounts (FSA). Employees' contributions to HSA accounts decrease their taxable income rather than functioning as a direct deduction like FSA funds.
Following that, workers can utilize the funds for qualified medical expenses without incurring any additional tax penalty.
There are restrictions on how much money an individual or family may contribute to a 401(k) or FSA account. Contributions to an HSA matched by the employer are also an option.
In contrast to FSA money, HSA funds are not limited to a single savings account. Several HSA plans are available, and many encourage employees to invest their savings in the stock market to earn a return.