Health Savings Accounts have many advantages for both employers and employees who want to save on taxes. When they are properly set up as a pre-tax savings plan, both employers and employees save on their employment taxes.
Pre-tax contributions from an employee’s pay are added to their HSA account and are set aside for medical expenses. They help provide additional funds for prescriptions and other health costs that other health insurance plans may not cover. Funds may be safely withdrawn, tax-free, to pay for medical expenses. Meanwhile, these accounts may earn interest with a balance that carries over each year. This can make an HSA additionally act as a retirement fund investment.