J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

3.2 Health Savings Accounts (HSAs) and Archer MSAs

If you are covered by a qualifying high-deductible health plan (HDHP), your employer may make tax-free contributions to a health savings account (HSA) on your behalf. Earnings accumulate tax free within an HSA and distributions are tax free if used to pay your qualified medical expenses, or those of your spouse or dependents. If your employer does not make the maximum tax-free contribution to your HSA, you can make a deductible contribution, so long as the total does not exceed the annual contribution limit (see below).

Archer MSAs are an older type of medical savings plan that HSAs are intended to replace. If your employer set up an Archer MSA on your behalf before 2008, or you became eligible to participate after 2007 in a pre-2008 plan, your employer may continue to contribute to the account. If you work for an eligible small employer with a high-deductible plan, your employer may make tax-free contributions to an Archer MSA on your behalf. A rollover can be made from an Archer MSA to a new health savings account (HSA) that accepts rollovers. If the Archer MSA is retained, withdrawals will be tax free if used to pay qualified medical expenses for you, your spouse, or your dependents.

Health Savings Account (HSA)

You may set up an HSA only if you are covered by a qualifying high-deductible health plan (HDHP, see details below), you are not enrolled in Medicare, and you are not the dependent of another taxpayer. Generally, you ...