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Health Savings Account (HSA)

A health savings account (HSA) is a savings account in which individuals can contribute to save for qualified medical expenses. Some of these expenses include deductibles, co-pays, medications, and some services that are not covered by traditional health insurance plans. These accounts are tax-free but only available to people with healthcare plans that have higher-than-average out-of-pocket expenses.

What Small and Midsize Businesses Need to Know About Health Savings Account (HSA)

SMBs may opt to set up and contribute to HSAs for their employees. Although HSAs are connected directly to each individual and not to their specific job or employer, SMB owners can receive a tax deduction for the funds they contribute to these accounts on behalf of their employees. Eligibility rules can vary widely based on factors such as health insurance plans and industry. If an SMB is considering HSA contributions, they should consult an accountant before doing so.

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