Last year, I anticipated that 2006 would be “The Year of the Health Savings Account,”¹ or HSA. Such accounts are held at financial institutions, into which employers or employees deposit pre-tax dollars. Any American with a qualifying, low-premium policy can open an HSA. Money in the account used for health spending is never taxed. HSA owners 65 and older can tap into the account for non-health purposes, but that money is added to their taxable income when they withdraw it. In this respect, an HSA is similar to a 401(k) retirement account.

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