A health savings account popularly known by the abbreviation HSA is a special savings account generally owned by an individual used to pay for present and future medical cover. Other health coverage and diseases like specific disease or illness insurance and accident, disability, dental care, vision care and long- term care insurance are also eligible for HSA.

The contributions to the Health savings account can be made by the employer or the individual or both if the contribution to the Health savings account is made by the employer then it is not taxable to the employee and if the contribution to the Health savings account is made by the individual then it is above the line deduction from his income.

The special provision in the contribution to the Health savings account is that the contribution to the Health savings account can be made by others on behalf of individual and can be deducted by the individual. The contributions to the Health savings account can also be one time subject to the contribution limits for the year.

Opening a health savings account depends on this that you're buying coverage on your own or getting it through your employer.

If you are buying coverage on your own, You can find a list of health insurance companies offering health savings account plans. You can compare several companies policies or can search for a local agent who knows which policies are available in your area at the National Association of Health Underwriters Web site.

But If you are getting it through your employer, then you may have seen an HSA-eligible option during last-year's open-enrollment period (generally in the fall). If not, talk to your benefits manager to see if HSAs will be on your health insurance menu. Choosing an HSA could knock down your share of premiums significantly, and some employers may choose to fund all or part of the HSA for you -- perhaps even adding a 401(k)-style match.