 TITLE: What Is a Health Savings Account (HSA)? CONTENT: How Does an HSA Work?\n---------------------\nYou can open an HSA with an organization that's qualified to serve as a trustee for the account, which includes some banks, credit unions and companies that also manage IRAs.\nThe process is similar to opening a checking account, and you may receive a debit card or checks linked to your HSA. You may also be able to invest the money depending on where you open an account—and you can transfer your HSA to a different trustee later.\nAn HSA is intended for qualified medical expenses, such as copayments and coinsurance. Qualified expenses also can include medicine, equipment and procedures, and generally align with the medical and dental expenses that qualify for an itemizable deduction. If your spouse or a dependent is in need, you may be able to use your HSA to pay for qualified expenses on their behalf.\nYour contributions to the account may be tax-deductible, and you can withdraw the money tax-free for qualified expenses. However, if you use money from your HSA for a non-qualified expense, you'll have to include the withdrawal portion in your taxable income and pay an additional 20% penalty.\nThe penalty is waived if you're 65 or older, disabled or withdraw money from an account after the account holder passes. However, you still have to include those withdrawals in your taxable income if you don't use them for a qualified expense.\nYour employer may offer a flexible spending account (FSA), which is similar to an HSA but has distinct differences. With an HSA, you own your savings, but FSA funds are tied to your employer and can disappear if you don't use them or if you leave your job. END