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Health Savings Account (HSA)

A special savings account where you can put money aside, often tax-free, to pay for eligible medical expenses. It is typically paired with a high-deductible health insurance plan.

Qualified Medical Expenses

Medical costs, like doctor visits, prescriptions, or hospital stays, that can be paid for using tax-advantaged accounts like HSAs without incurring penalties.

Penalty-Free Distribution

Taking money out of an account, such as an HSA, without having to pay an extra tax penalty, usually because the money is used for its intended purpose.

Deductible Contributions

Money you put into an account, like an HSA, that can be subtracted from your taxable income, reducing the amount of income tax you owe.

Modified Adjusted Gross Income (MAGI)

A calculation of your income used for various tax purposes, which starts with your Adjusted Gross Income (AGI) and then adds back certain deductions or exclusions.

Substantiation

Providing evidence or proof that an expense or claim is legitimate and meets required criteria.

Internal Revenue Code of 1986