A Health Savings Account (HSA) can offer tax-advantaged ways to save and pay for eligible medical expenses. Employers may fund the HSA or allow employees to contribute to it with before-tax dollars. Individuals can also fund an HSA with after-tax dollars and benefit from tax deductions. Transferring funds from an IRA or other retirement savings vehicle is another option.
Check with your employer to see if HSA contributions are available. Companies can contribute to an HSA for employees even if they don't offer health insurance. Employer contributions are not taxable for the employer or the employee.
Find out if an employer provides a Section 125 "cafeteria plan" or flexible benefit program. If so, an employee may be able to contribute before-tax dollars to an HSA. But choosing this method means you cannot deduct contributions when filing your taxes.
Consider other sources that can be used to fund an HSA, such as an IRA or Archer medical savings account. Individuals have the option to make a one-time transfer of IRA funds to an HSA, up to annual contribution limits. Archer MSA rollovers are allowed within 60 days of withdrawing MSA funds. To use 401(k) dollars to fund an HSA, an individual must pay applicable taxes on the withdrawal.