HSA: How is a Health Savings Account tax advantaged?

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Health Savings Accounts are similar to an IRA, only better.  A Health Savings Account allows you to accumulate tax free dollars each year.  The funds can be withdrawn at any time for use on qualified medical expenses without paying a penalty or income taxes.  The money is always accessible for other expense, but, if spent on expenses other than qualified medical expenses, it will become subject to both income tax and a ten percent IRS penalty.

Once you are age 65 or older you may withdraw the money without penalty, although the money is still subject to income tax.

Health Savings Accounts give you many of the same benefits of an IRA and allow you to spend the money on qualified medical expenses.

You will never pay income taxes on money spent from the Health Savings Account on qualified medical expenses.