When first considering a health savings account (HSA), you should determine whether your health insurance coverage qualifies as a high deductible health plan. The US Treasury has defined a high deductible health plan as one with a deductible greater than $1,100. The plan can provide preventative care, and can be an HMO, PPO, or standard health insurance plan. Many self-employed individuals find themselves with plans of this sort, so an HSA may be especially useful for these individuals and families.

Both employers and individuals may contribute to HSAs. In the case of individuals, you may deduct your HSA contributions as an above the line deduction on your taxes. Employers' contributions to HSAs are not taxed. Some employers offer a "cafeteria" or "salary reduction" plan that allows contributions to an HSA pre-tax. In this case, you cannot claim the tax deduction for your contributions. Self-employed individuals may make use of the health savings account provision and claim the above the line deduction as well.

There are contribution limits in place on health savings accounts. The family HSA limit is $5,650 and the individual HSA limit is $2850. Older Americans are allowed to make catch up contributions, until they are covered by Medicare. Your health spending account can be a valuable way to set aside funds to cover health care expenses in the long-term.

Many Americans may wonder what they can spend their health savings on, and which medical expenses it covers. You can use your health savings account to pay any qualifying medical expenses. Qualifying medical expenses include not only your health insurance deductible, but also any expense that is primarily for the alleviation or prevention of a physical or mental defect or illness. Prescription medication, nursing help, dental care, eyeglasses and hearing aids all qualify. While an HSA may not be used to pay most health care premiums, it can be used to pay for long-term care insurance and COBRA insurance premiums in the event of job loss. Transportation costs for medical care may also be a qualified medical expense.

While your HSA may not be needed for many years, making regular contributions will provide you with additional financial security in years to come. Your HSA is an investment, much like an IRA, and your funds will grow. Even a small contribution can make medical care more affordable, whether it is simply a new pair of glasses or a sudden illness or injury. You own your health savings account, not your employer. Consider taking advantage of this opportunity to reduce your tax burden and relieve the burden of expensive health care in the future.