Practical Law Glossary Item 8-505-2297 (Approx. 2 pages)
Glossary
Health Savings Account (HSA)
A custodial account or trust that is funded with contributions by employers or eligible individuals and is used to reimburse "qualified medical expenses" (26 U.S.C. §§ 213(d) and 223). HSAs, which are generally exempt from taxation, were created under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and could be established beginning in 2004.
An individual who contributes to an HSA must be covered by a high-deductible health plan (that is, a health plan that complies with certain restrictions involving deductibles and out-of-pocket expenses).