Taxpayers can create a tax-exempt trust or custodial account by having a Health Savings Account (HSA) trustee used to pay or recoup some of their medical expenses in the United States.
An HSA is a type of personal savings account set up to pay certain health care costs. This savings program allows you to put money away and withdraw it tax-free as long as it is used for qualified medical expenses, as explained in HealthCare.gov.
Anyone can create an HSA since you won’t need approval or permission from the Internal Revenue Service (IRS). Taxpayers with accounts on trustees recognized by the IRS, such as MSAs and IRAs, are also qualified to apply for HSA trustees.

Taxpayers with HSA contributions can withdraw their earnings tax-free as long as it is used for qualified medical expenses. (Photo: AgingCare)
See: Maximizing Your Tax Savings: A 2022 Tax Refund Guide to Qualify for Pretax IRA Contributions
Andrew Westlin, a senior financial planner at Betterment, said an HSA or High Deductible Health Plan wouldn’t be suitable for those interested applicants who frequently visit the doctor or cannot afford to pay a deductible out of pocket. These plans are a great fit for those who are healthy, have a safety net, or have a deductible with cash on hand. He added that HSA is better for a savings account, retirement account, or a long-term investment.
Are HSA Contributions Deductible?
According to Marca, taxpayers can claim a tax deduction from their HSA contributions even if they don’t itemize the deduction on Schedule A or Form 1040.
The IRS press release revealed that HSA contributions made by your employer (including those made through a cafeteria plan) might be excluded from your gross income. The contributions would remain in your account, and the interest or earnings on the asset are tax-free.
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