As healthcare costs continue to rise, it’s essential to explore ways to manage these expenses effectively. An HSA is a valuable tool that can help you save money on medical expenses while providing tax advantages. In this guide, we’ll walk you through the basics of HSAs, their benefits, how to qualify, and how to make the most of this financial tool.

What is an HSA?
A Health Savings Account (HSA) is a tax-advantaged savings account specifically designed to help individuals with high-deductible health plans (HDHPs) save money for medical expenses. Contributions to an HSA are tax-deductible, and withdrawals used for qualified medical expenses are tax-free.

Benefits of an HSA:

  1. Tax Advantages: Contributions to an HSA are tax-deductible, reducing your taxable income for the year. Additionally, any interest or investment gains earned within the HSA are tax-free, allowing your savings to grow faster.
  2. Flexibility: HSAs offer flexibility in how you use your funds. You can use them to pay for qualified medical expenses not covered by your insurance, including deductibles, copayments, prescriptions, and certain over-the-counter items.
  3. Portability: HSAs are portable, meaning you can take them with you if you change jobs or health insurance plans. Your HSA funds belong to you, regardless of your employment status.
  4. Savings for the Future: Unlike flexible spending accounts (FSAs), HSAs have no “use it or lose it” rule. Any unused funds roll over from year to year, allowing you to save for future medical expenses or retirement healthcare costs.

Qualifying for an HSA:
To be eligible to open and contribute to an HSA, you must meet the following criteria:

  • Be covered by a high-deductible health plan (HDHP)
  • Not be enrolled in Medicare
  • Not be claimed as a dependent on someone else’s tax return
  • Not have other health coverage that is not an HDHP, with certain exceptions

Making the Most of Your HSA:

  1. Maximize Contributions: Contribute the maximum allowed amount to your HSA each year to take full advantage of the tax benefits and maximize your savings potential.
  2. Keep Track of Expenses: Save receipts and records of your medical expenses paid with your HSA funds. This documentation may be needed for tax purposes or to verify qualified expenses.
  3. Plan for the Future: Use your HSA as a tool for long-term financial planning. Save for future medical expenses in retirement, when healthcare costs are likely to increase.


A Health Savings Account (HSA) can be a valuable financial tool for managing healthcare expenses and saving for the future. By understanding the benefits of an HSA, qualifying criteria, and how to make the most of your account, River Valley Credit Union members can take control of their healthcare costs and build a secure financial future. If you have any questions or need assistance with opening an HSA, please don’t hesitate to reach out to us at River Valley Credit Union. We’re here to help you navigate your financial journey with confidence and peace of mind.

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