If your company offers a High Deductible Health Plan (HDHP) then they will provide a tax deferred savings account called a Health Savings Account (HSA). This account allows you to save pre-tax dollars for qualified health expenses. These health expenses can be anything health related from prescription drugs, doctor fees, hostpital fees, eye exams, eyeglasses, dental expenses, generic drugs and Over the Counter drugs. Usually this money is placed in a savings account with a bank or other financial establishment. Most of these accounts pay interest on your money as it accumulates but some charge you a fee to hold your money. Let your company know if they don't get an attractive account, better accounts are out there. The money you put in the HSA is yours forever. It doesn't expire at the end of the year like an FSA does. Any amounts leftover at the end of the year are rolled over into the next year. You can keep accumulating money in these accounts year after year. The maximum you can contribute in 2009 is $3000 for an individual or $5950 for a family. An additional contribution of $1000 can be made for any one over 55 by the end of 2009. Some companies match a portion of your contribution into an HSA. Its always good to take advantage of any free matching money that your company offers.
There is an interesting aspect to these accounts in that you can roll them over like an IRA. Doing so keeps this money in a tax deferred state. This allows for another vehicle to save money in a tax deferred manor, even if you have max'd out your other ways of doing this. For example, you are nearing retirement and you want to put more money aside. You have put the maximum in your 401K and you are not eligible to contribute to an IRA. Well put the maximum amount in your HSA. Use it to pay your medical expenses or don't spend any of it and save it for future medical expenses for after your retire.
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