A health savings account (HSA) is a triple-tax-advantaged account that allows individuals to save for current and future healthcare costs. The triple-tax advantages of HSA includes: (1) The contributions are tax-free, (2) the interest and dividends grow tax-free, (3) and the withdrawals are tax-free if spent on qualified medical expenses.
Your health savings account is a powerful tool to help you save and pay for qualified medical expenses today, tomorrow and in the future — even in retirement. Alicia Hudnett explained at CNN Money on why HSA is the best retirement account you don't know about and why you should use it: “An HSA combines the best features of all the various tax-advantaged retirement accounts available. If used correctly, money goes in tax-free, grows tax-free, and comes out tax-free… An HSA account is similar to other retirement accounts in that the account is portable and moves with you, the funds roll over from year to year, and you can invest the money in the account for the long term. Even if you use some of the funds during the year and are able to save only a portion of your yearly contribution, you can invest the balance, making this another opportunity to save for your retirement years.”