A Health Savings Account (HSA) is a tax-exempt trust or custodial account, established by you and your employer, to pay for your qualified medical expenses. Generally, this account set up exclusively for paying the qualified medical expenses of the account beneficiary or the account beneficiary’s spouse or dependents.

Distributions from an HSA used exclusively to pay qualified medical expenses of the account beneficiary, spouse, or dependents are excludable from gross income. You can receive distributions from an HSA even if you are not currently eligible to have contributions made to the HSA. However, any part of a distributions not used to pay qualified medical expenses is includible in gross income and is subject to an additional 10% tax unless an exception applies.