Health Savings Accounts If you know how an IRA works, you already know a lot of the basic idea here. If you know how Flex-Spending plans work, you know a lot of the basic idea here, too. If you are familiar with the old MSAs, guess what? Yes, you know a lot of the basic idea here. You put money into an HSA on a regular basis (monthly), then spend it on medical expenses tax-free. Unlike a Flex-Spending account, it never expires. Like an IRA, you earn interest (I’ll get 4%APR), and if you spend it on non-medical expenses, you’ll pay a penalty. Here’s the cool part: you can put in as much as your deductible each year. For my policy, I must put in at least $25 per month, and I may put in up to $429.17 per month. And remember, all money spent from this account om medical expenses is tax-free. So let’s assume that I put in the maximum amount every month. My total spending per month ($690.19) would be barely more than if I went ahead and paid into my employer health plan, but most of that money would be sitting in an account I control, ready to spent on expenses of my choosing. Now, if I have insurance that covers 100% of everything after the first $5150, and I have $5150 in an account that I can spend on medical stuff, my total out-of-pocket expenses in the event of a medical emergency are: $0. Nothing at all. I spend until my HSA is empty, and then the insurance picks up the rest.