Employee Benefits

What Is an HSA?

3 min read
Feb 05, 2024

Even with great health insurance, the cost of health care can be surprising. One way to help save on those costs is with a health savings account (HSA), an account designed to be used for qualified healthcare expenses.

How does an HSA work?

An HSA works by allowing you to contribute money on a pre-tax basis to pay for various out-of-pocket health-related expenses. HSAs are used in combination with high-deductible health plans (HDHP). 

2024 HDHP qualifications for an HSA

According to the Internal Revenue Service (IRS), a qualifying HDHP for 2024 is defined as having a deductible of at least $1,600 for self-only coverage or $3,200 for family coverage.1 A qualifying HDHP must also limit the annual out-of-pocket maximum expenses to $8,050 for self-only coverage and $16,100 for family coverage. Such out-of-pocket expenses include deductibles, co-payments, and other amounts — but not premiums.1

Additional HSA eligibility requirements

In addition to being enrolled in an HSA-compatible HDHP, you’ll need to meet the following requirements to contribute to an HSA:2

HSA contributions

If you're enrolled in an eligible HDHP, you can make pre-tax dollar contributions to an HSA — as can your employer, spouse, and family members.2 For 2024, HSA contribution limits are $4,150 for individuals and $8,300 for families.

HSA-eligible expenses

For a complete list of eligible expenses, review Publication 502, Medical and Dental Expenses from the IRS.Here are some examples of eligible HSA expenses from the IRS list:

  • Laboratory fees
  • X-rays
  • Prescription eyeglasses
  • Annual physical exams

HSA Benefits

There are several benefits to having an HSA:

Contributions aren’t subject to tax: The money you put into an HSA is excluded from your taxable income, as are any contributions made by an employer. 

Money can be invested to grow tax-free: The money in your account can be used to invest.

Withdrawals aren’t subject to tax: As long as you use the money in your account for qualified medical expenses, withdrawals are tax-free.

Balances automatically roll over to the next year: HSAs aren’t subject to any “use-it-or-lose-it” mandates. This means the money in your account doesn't expire, and any leftover money can be used the following year.


A flexible spending account (FSA) is similar to an HSA. Both are health savings accounts intended to be used for medical expenses.

Here are some key differences between them:

  • FSAs must be set up by an employer 
  • Funds in an FSA typically need to be used by the end of the year, but there are exceptions.
  • Money in an FSA can’t be invested or earn interest.
  • Money in an FSA doesn’t go with you if you change employers.


A health reimbursement arrangement (HRA) is an account that can also help you save on eligible healthcare costs. But unlike an HSA, an HRA is entirely funded by your employer. This means you can’t make contributions from your own income.2

Here are some key differences between HSAs and HRAs:

  • HRAs are fully funded by an employer.
  • HRAs typically aren’t portable, and the funds remain with the employer if you change jobs.
  • HRAs don’t have contribution limits.
  • Money in an HRA can’t be invested or earn interest.
  • HRA funds typically don’t roll over to the next year unless the employer allows it.

Learn about MetLife Health Savings & Spending Accounts

Designed to help you save

1 “26 CFR 601.602: Tax forms and instructions,” IRS

2 “Publication 969 (2022), Health Savings Accounts and Other Tax-Favored Health Plans,” IRS

3 “About Publication 502, Medical and Dental Expenses,” IRS


Nothing in these materials is intended to apply to a particular individual's financial situation.