A health savings account is a type of savings account meant to be used for health expenses only. Any money deposited in the account is not taxed as income. Health savings accounts are only available to people with a special type of high-deductible health insurance.
High-deductible insurance plans and health savings accounts are designed to give people more discretion in their health spending and to encourage competition among health care providers. Health savings accounts are most advantageous for people in generally good health who want to save for future medical expenses. Those who anticipate high health care costs in the near future may be disadvantaged by using this option, since healthcare needs are not always predictable.
Employers sometimes offer access to health savings accounts in addition to a high-deductible health insurance plan. Individuals with these insurance plans can also open health savings accounts on their own. Only people under the age of 65 may open health savings accounts. A person that takes advantage of his spouse's insurance as a secondary plan must also carry high-deductible health insurance. A high deductible requires that a patient spend at least $1,250 on health expenses before the insurance begins to pay or reimburse healthcare expenses.