A Health Savings Account (HSA) is a great way to save money for qualified medical expenses. You decide how and when to use the money, and you get tax benefits.

An HSA is a special savings account for health-related spending. You or your employer can deposit money into it, tax free. This means you don't have to pay income tax on what you contribute each year (up to a limit). You can then use the money in your HSA for medical expenses.

HSAs work together with high-deductible health insurance policies. With this type of insurance, you pay a lower premium each month to keep your coverage. The tradeoff is a higher deductible, which is the amount you pay each year before your insurance pays.

Here's how it all works:

• You and/or your employer contribute tax-free money to your HSA.
• You use the money in your HSA to pay for approved medical and dental costs.
• You pay 100 percent of covered costs until you've met your deductible. One important exception: Your plan pays for all preventive care.
• After you meet your deductible, your insurance starts to pay. You'll still have some costs after you meet your deductible. Coinsurance (a percentage of the charges for a health care service that you pay) may apply.
• You'll have a yearly out-of-pocket limit. Once you reached this limit in payments, the plan will pay 100 percent of covered costs.
• Unspent money stays in your HSA, year after year. You decide when and how to use it.

No. You need a high-deductible plan to have an HSA. But you don't need an HSA to have a high deductible plan. People pair them because it's a good way to set aside tax-free money knowing that it can be used to pay medical expenses (including paying the high deductible) if needed.

First, enroll in a high-deductible health insurance plan. Then find a qualified HSA administrator. This is a financial institution that manages HSAs. Like a bank (but for HSAs specifically) it'll hold your money in a secure account until you need it. Our preferred HSA administrator, Medsurety, has helpful information and next steps available online.

You can use it for:

• Deductible and coinsurance payments
• Routine health care like office visits, X-rays, and lab work
• Hospital expenses like surgery, room and board, and more
• Dental care such as cleanings, fillings, and crowns
• Vision care such as eye exams, glasses, and contacts
• Prescriptions
• Eligible over-the-counter items, such as:
• First aid dressings and supplies like bandages and rubbing alcohol
• Contact lens solutions and supplies
• Diagnostic products like thermometers, blood pressure monitors, and cholesterol testing supplies
• Insulin and diabetic supplies

You can find a full list of HSA eligible expenses on the IRS website in IRS Publication 502.