Hey, that’s just the question we were hoping for! In fact, “What’s an HSA?” is our favorite question—and this whole site is devoted to answering it in a way that is easy to read and understand. At least that’s what we’re shooting for.

But first—we’ll cover the basics. HSA stands for “Health Savings Account,” and it’s an easy (and smart!) tool for consumers like you to use to save money for the healthcare expenses of you and your family.

If you’ve got 3 minutes and 38 seconds to spare and want a quick primer on Health Savings Accounts, check out the video below and you will be on your way. When you are done please read on and we will de-mystify this whole HSA thing for you.

You’re probably (A) still scratching your head, and/or (B) thinking, “So an HSA is like insurance.” Close, but not exactly. HSAs aren’t technically insurance—an HSA is a tool that you use along with an insurance plan. Like an iPod is to your music collection. Or a pair of $200 sneakers to your already-impressive “skillz” on the court. It’s such a revolutionary and powerful idea, though, that you’ll often hear people refer to their HSA-equipped insurance plan as an “HSA Plan” or “HSA-based health plan.” And that’s just fine with us, because the HSA is really the coolest part.

So why HSAs? Because an HSA-based health plan will help you:

• save money on healthcare
• give you more choice and control in how you spend your healthcare dollars
• pay less taxes

How this whole “HSA” idea works:

You know how insurance is kind of complicated? Well, the concept behind an HSA is surprisingly simple.

An HSA is just a bank account with special features. Your HSA belongs entirely to you, and you or any generous folks you know (even your employer, if they wish) can deposit money into your HSA to save for future medical expenses.

As for those special features (this is the good stuff):

First, any money contributed to an HSA is tax deductible on your annual income tax filing. Every penny of it. And, as long as your HSA money is used to pay for eligible medical expenses, you’ll never be charged income tax on that money. This tax benefit can save you between 25% and 40% on every dollar you contribute (depending on your personal tax bracket). Check out our HSA Calculator to quickly see how much you can save with your HSA .

Just like a regular bank account, the unused money in your HSA rolls over from year to year so you can build your savings to cover future medical expenses—you’ll never lose unspent money. And since your HSA belongs entirely to you, it’s completely portable and ready to move with you if you change jobs, transfer to another state, or quit your job altogether and train to become the next Tony Hawk. (Or whatever your personal dream is—the skateboard superstar thing is ours.)

And finally, your unused HSA money earns interest, which is just as good as money—and get this, earnings are still tax-free. Most banks will even let you invest a portion of your HSA dollars in stocks, bonds, and mutual funds for even bigger returns! In fact, you won’t find a savings vehicle anywhere that gives you a triple tax advantage, easy access to your money, and the kind of investment options you can get from an HSA.

Better than Traditional Insurance?

HSAs make traditional insurance look like the equivalent of buying a lottery ticket and crossing your fingers for good health. How? When combined with the right insurance plan, you can take the savings from lower premium costs and sock them away in your HSA—changing your healthcare plan from an “in case I need it” plan to a “when I need it” plan.  Even if you have a pre existing condition, you may find that acquiring an HDHP with an HSA is the best option for you.

What do you think? It’s true. Feel free to re-read this again if you’re still scratching your head or send us a note (click here) at and we’ll take a look at ways to make it, well, make sense.