Thirteen years into this HSA experiment, health savings accounts are still wildly misunderstood. Are they employer-sponsored health plans, spending accounts, checking accounts, savings accounts, investment accounts, or is it now most appropriate to refer to them as a retirement savings vehicle?
Here’s what HSAs are not: employer-sponsored health plans, despite the fact that many employers assist in establishing them for employees and contribute to the accounts. HSAs are best thought of as individually owned tax-exempt trust or custodial accounts available to individuals covered by what the IRS considers to be an HSA-eligible health plan. That’s pretty cut and dry, however it’s easy to see why there is still so much confusion. After all, an HSA shares many of the characteristics of the accounts listed above, and it’s up to the individual to decide how best to use the account.