My company uses an HSA (Health Savings Account) for our insurance payments.I'm allowed $1250 yearly,which is divided into 4 quarters,every 3 months $315.I used all of my $1250 last year (2007) towards medical bills.Will I have to pay the IRS taxes on this money?
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You don't pay taxes on that money. If you don't use all all of the money set aside for that calendar year you will lose it as it doesn't roll over from one year to the next. Our HSA plan gives us until March of the year to submit everything for the previous year and we make sure we submit everything to use up every penny.
The previous poster is confusing Health Spending Accounts (HSAs) with Flexible Spending Accounts (FSAs). You DO NOT have to spend all of your HSA money each year -- you WILL NOT lose it if you don't use it! The idea of an HSA is that you can build up that account and use it for years to come. Flex Spending Accounts on the other hand DO have to be used up each year or you will lose the funds -- but again, HSAs and FSAs are 2 very different things!
And to answer your original question, withdrawals from the HSA are tax exempt, as long as they are used for qualified medical expenses.
HSA and the IRS 
Re: HSA and the IRS 
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