Health Savings Accounts (HSAs) -- made available to consumers with the passage of the Medicare Modernization Act of 2003 – allow employers, employees and anyone else to contribute money to an account (the HSA), which an eligible individual uses to pay for qualified medical expenses until the deductible is reached.

Once the deductible is met, the individual’s health expenses are paid according to his or her health plan. The tax-advantaged accounts also permit unused funds to be “carried over” from year to year even if the employee changes employers. Any interest gained from the HSA belongs to the individual. Anyone who uses an HSA must also maintain health care benefits through a qualified high-deductible health plan (HDHP).