• A health savings account helps you save for health expenses.saving image by Lyle Doberstein from Fotolia.com
  
  The HSA or health savings account is a type of savings account that you can use to save tax-advantaged dollars for your future health expenses. This account can be set up at any bank and can be used to pay for health expenses like co-pays, deductibles and medication. While this type of account can be beneficial, it definitely has a few potential drawbacks.
  
  

Contribution Limit

• There is a maximum amount that you can contribute to a health savings account every year. For example, as of 2010, individuals can contribute a maximum of $3,000 per year while families can contribute a maximum of $5,950 per year. This puts a limit on the amount of tax-advantaged money that you will have available for medical costs. Your medical bills could potentially add up quickly and be much greater than $3,000 or $5,950 over the course of a year.
  
  

Covered Expenses

• When using a health savings account, certain expenses will not be covered. If you are trying to purchase a medical treatment or medication that is not considered a qualified expense, you will not be able to use the money. For example, after January 1, 2011, you will no longer be able to use your health savings account to purchase over-the-counter drugs. You will have to use other money to pay for these unqualified expenses.
  
  

Paying in Advance

• When saving with this type of account, you have to decide how much you want to save in advance. You do not have to pay for regular medical bills until you incur them. With a health savings account, you will have to make regular contributions throughout the year to fund the account. If you save a large amount of money but never have any medical issues, you are setting aside money that could be used for other purposes.
  
  

Penalty

• If you take money out of a health savings account prior to turning 65, you will have to pay a penalty. This early distribution penalty amounts to 10 percent of the money that you take out. You will also have to count the money as regular income and pay income taxes on the amount. This limits your access to the money that you have put into the account. If you are a healthy person, it can be difficult to decide how to best use your money.