What is an HSA?
An HSA is the newest of all tax-favored medical savings plans. An HSA is a tax-exempt trust or custodial account that a taxpayer sets up with a qualified HSA trustee. Distributions from an HSA are nontaxable if the funds are used for qualified medical expenses. A taxpayer must be an eligible individual to qualify for an HSA.
No permission or authorization from the IRS is necessary to establish an HSA. To set up an HSA a taxpayer will need to work with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRA) or Archer MSA. The HSA can be established through a trustee that is different from the taxpayer's health plan provider.
An HSA is created by: