HSA Glossary (2026)

Above-the-Line Deduction

A tax deduction taken before calculating adjusted gross income, available even if you don't itemize.

Allowed Amount

The maximum amount your insurance plan will pay for a covered service, also called the negotiated or contracted rate.

Archer Medical Savings Account (MSA)

A predecessor to HSAs, available only to self-employed individuals and small business employees with high-deductible plans.

Balance Billing

When an out-of-network provider bills you for the difference between their charge and what insurance pays.

CARES Act

The 2020 law that expanded HSA-eligible expenses to include over-the-counter medications and menstrual products.

Catch-Up Contribution

An extra $1,000 that people age 55 and older can contribute to their HSA each year.

Coinsurance

The percentage of costs you pay for covered healthcare services after meeting your deductible.

Contribution Limit

The maximum amount you can contribute to an HSA in a calendar year, set annually by the IRS.

Copay (Copayment)

A fixed amount you pay for a covered healthcare service at the time of the visit.

Deductible

The amount you must pay out-of-pocket for healthcare before your insurance starts covering costs.

Dependent Care FSA (DCFSA)

An employer-sponsored account for paying childcare and dependent care expenses with pre-tax dollars.

Eligible Expense

A healthcare cost that qualifies for HSA payment or reimbursement. Same as qualified medical expense.

Employer Contribution

Money your employer puts directly into your HSA, which counts toward your annual contribution limit.

Exclusive Provider Organization (EPO)

A health plan that requires in-network care like an HMO but doesn't require referrals like a PPO.

Explanation of Benefits (EOB)

A statement from your insurance showing what was billed, what they paid, and what you owe for a medical service.

FDIC Insured

Federal deposit insurance that protects your HSA cash balance up to $250,000 if your bank fails.

FICA Taxes

Federal Insurance Contributions Act taxes for Social Security and Medicare, which HSA payroll contributions help you avoid.

Flexible Spending Account (FSA)

An employer-sponsored account that lets you pay for eligible healthcare expenses with pre-tax dollars, typically with a use-it-or-lose-it rule.

Form 8889

The IRS form used to report HSA contributions, distributions, and calculate your HSA deduction.

Health Maintenance Organization (HMO)

A health plan that requires you to use in-network providers and get referrals for specialists.

Health Reimbursement Arrangement (HRA)

An employer-funded account that reimburses employees for qualified medical expenses and sometimes health insurance premiums.

Health Savings Account (HSA)

A tax-advantaged savings account for people with high-deductible health plans to pay for qualified medical expenses.

High-Deductible Health Plan (HDHP)

A health insurance plan with a higher deductible and lower premiums that qualifies you to open an HSA.

HSA Administrator

A company that manages HSA services for employers, handling enrollment, contributions, and employee access.

HSA as Retirement Account

Using your HSA as a long-term investment vehicle for retirement, similar to a 401(k) or IRA.

HSA Beneficiary

The person who inherits your HSA when you die, with tax treatment depending on whether it's your spouse.

HSA Custodian

The bank, credit union, or financial institution that holds and manages your HSA.

HSA Penalty

The 20% additional tax on HSA withdrawals used for non-qualified expenses before age 65.

In-Network

Healthcare providers who have contracts with your insurance plan to provide services at negotiated rates.

Individual Coverage HRA (ICHRA)

An employer-funded account that reimburses employees for individual health insurance premiums and medical expenses.

Ineligible Expense

A healthcare-related cost that cannot be paid tax-free from an HSA, such as cosmetic procedures or gym memberships.

Investment Options

The stocks, bonds, mutual funds, and other investments available within your HSA for long-term growth.

IRS Publication 502

The official IRS document listing which medical and dental expenses qualify for tax benefits.

Last-Month Rule

An IRS rule that lets you contribute the full annual HSA limit if you're eligible on December 1st.

Letter of Medical Necessity (LMN)

A document from your doctor stating that a specific item or service is medically necessary for your condition.

Limited Purpose FSA (LPFSA)

An FSA that covers only dental and vision expenses, designed to work alongside an HSA.

Medicare

Federal health insurance for people 65+ that ends your eligibility to contribute to an HSA.

Mega Backdoor HSA

Contributing additional after-tax funds to an HSA beyond the normal limits, then converting to tax-free status through medical expense reimbursement.

Out-of-Network

Healthcare providers who don't have contracts with your insurance plan, usually resulting in higher costs.

Out-of-Pocket Maximum

The most you'll pay for covered services in a plan year, after which insurance pays 100%.

Portability

The ability to keep your HSA when you change jobs, retire, or switch health plans.

Pre-Tax

Money contributed to your HSA before income taxes are calculated, reducing your taxable income.

Preferred Provider Organization (PPO)

A health plan that offers flexibility to see any doctor, with lower costs when you use in-network providers.

Premium

The monthly amount you pay to maintain your health insurance coverage.

Preventive Care

Routine healthcare services designed to prevent illness or detect problems early, often covered before meeting your deductible.

Primary Care Physician (PCP)

Your main doctor who provides routine care and coordinates specialist referrals in HMO plans.

Qualified Medical Expense

Healthcare costs that can be paid or reimbursed tax-free from your HSA, as defined by the IRS.

Qualified Small Employer HRA (QSEHRA)

An HRA for small businesses that reimburses employees for individual health insurance and medical expenses.

Receipt

Proof of payment for a medical expense that you should keep for HSA substantiation and future reimbursement.

Referral

Authorization from your primary care doctor to see a specialist, required by some insurance plans.

Reimburse Yourself

Taking money from your HSA to pay yourself back for qualified medical expenses you paid out-of-pocket.

Rollover

Unused HSA funds that carry forward to the next year, unlike FSA balances that typically expire.

Self-Employed HSA

HSA contributions for self-employed individuals, who get the same benefits but handle contributions differently.

Shoebox Strategy

Paying medical expenses out-of-pocket now and saving receipts to reimburse yourself tax-free from your HSA later.

Substantiation

Documentation proving that HSA distributions were used for qualified medical expenses.

Super Saver Strategy

Maximizing HSA contributions while using an LPFSA for dental and vision expenses to preserve your HSA balance.

Tax-Deductible

HSA contributions that can be deducted from your taxable income, even if not made through payroll.

Tax-Free Growth

Investment earnings in your HSA that are never taxed, unlike regular brokerage or savings accounts.

Tax-Free Withdrawal

Money taken from your HSA for qualified medical expenses without owing any taxes.

Triple Tax Advantage

The three tax benefits of HSAs: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Trustee-to-Trustee Transfer

Moving HSA funds directly between custodians without taking a distribution, avoiding taxes and limits.

Use It or Lose It

The FSA rule that forfeits unused funds at the end of the plan year, unlike HSAs which roll over.