Definition
A triple tax-advantaged account available with a high-deductible health plan: deductible contributions, untaxed growth, and tax-free withdrawals for qualified medical costs. After 65, non-medical withdrawals are simply taxed like a traditional IRA.
Why it matters
The HSA is the only account with untaxed money in, growth, and money out. Invested and left alone, it doubles as a stealth retirement account with a worst case of merely being a traditional IRA.
Example
An employee with a high-deductible plan maxes the HSA, invests the balance, and pays routine medical costs from cash flow instead. Decades later the account covers retirement healthcare completely tax-free.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.