Do I have to pay taxes on my Health Savings Account?
You may only set up a tax free health savings account (HSA) if you are covered by a high-deductible, qualified HAS, not enrolled in Medicare, and not a dependent of another taxpayer. If your employer provides contributions to your health savings account on your behalf, they are tax free. Further, distributions from health savings accounts are tax-free so long as the distributions are used toward qualified medical expenses. Individuals can also make deductible contributions to health savings accounts so long as it does not exceed the annual contribution limit.