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The full form of HSA is a Health Savings Account which is a type of savings account. You can keep pre-tax funds in this savings account for any kind of medical expenses. As you have a Health Savings Account, you will be able to pay for your required medical expenses, while not affecting your taxable income. Since it is quite a new concept in India, we can discuss this at a bit of length to understand what it basically is and several other things about HSA.
Health Savings Account is managed by the Government of India body and is a voluntary payment account. The concept involves both health as well as investment, and one can use it at the time of medical expenses. The funds invested in an HSA ensure you of getting the required monetary help for medical expenses in the future. While most of us are unaware of our future and may any time end up in the hospital, and it may make a big hole in our pockets, this kind of savings account can be of big help. However, you need to know that the payments you make with an HSA account should be done only for expenses related to healthcare.
A HSA can be opened by any individual in the country. However, an individual has to put money in this account before paying taxes on their income. HSA uses include covering the medical cost. The amount they contribute is then deducted from the taxable income, which enables you to pay fewer taxes on the income. Anybody opening an individual HSA must know that they cannot use the funds for any non-medical expenses.
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HSA come with a lot of benefits, and here some of them are mentioned below:
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One can open an HSA with a bank or a credit union. However, you need to have your savings account with the bank or the credit union. As you plan to open a HSA, you need to meet the health savings account requirements as stated below:
To open a Health Savings Account, you can either choose an online or physical mode. The documents that you need to provide are:
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These are three different concepts and quite different from each other. Let us discuss them further to understand each of them.
| HSA | HRA | FSA |
| The full form of HSA is Health Savings Account | The full form of HRA is Health Reimbursement Account | The full form of FSA is a Flexible Spending Account |
| You can contribute the money to a savings account on a pre-tax basis | A monthly fund is provided by the employers to their employees for tax-free money that is designated for medical expenses | Employers own the FSA accounts and are quite similar to HRA |
| HSAs can either be opened by an individual or an employer can offer it | Only an employer can open it | Only an employer can open it |
| The amount that is not used gets rolled over to the next year | The unused amount gets lapsed | The unused amount gets lapsed |
Health Savings Account or HSA can be a great help for those who want to safeguard their own and their family’s health while maintaining financial stability. It is also a popular choice for employers to offer it as a benefit to their employees.
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HSA is generally considered better than HRA since the unused amount in HSA gets rolled over to the next year which is lapsed in HRA.
Yes, HSA can be opened at any banking institution where you have a saving account. You can also ask for recommendations from your insurer or employer.
Investment in HSA does make sense since it protects from financial hardships resulting from a medical exigency.
Any citizen of India above the age of 21 years is eligible to open an HSA. The maximum age for opening an HSA is capped at 55 years.
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