What is a health savings account (HSA)?

A health savings account (HSA) is a tax-free savings account you can use to pay for medical expenses if you have a high-deductible health plan (HDHP). 

If you spend your HSA on non-medical expenses, the money will be taxed and you’ll receive a 20% penalty if you're not disabled or under the age of 65.

There’s also an annual limit to how much money you and your employer can add to your HSA. Read this article to learn more about excess contributions.

HSA contributions made by you and your employer are in box 12 of your W-2 with the code W.

If you have an HSA, you may use these tax forms:

• Form 5498-SA: An informational form that you don’t need to enter
• Form 1099-SA: A form that reports how much HSA money you spent
• Form 8889: A form that TurboTax will generate for you if you contributed to, or spent money from, your HSA