– Funds deposited in the health savings account may be tax deductible, up to a certain amount each year. In addition, people are not taxed on the interest earned. If people take the funds to cover qualified medical expenses, there is no tax penalty for doing so.
– Tax applies on withdrawal of funds to cover the other costs. People can change the health savings plans, turning their plan to a different bank, and in some cases they may be able to switch the medical savings account to another type of secure savings account, such as a retirement account.
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