Health Savings Account (HSA)
To appreciate the amazing features of a Health Savings Account (HSA), learn more about how the HDHP and HSA work together.
How does an HSA benefit me?
An HSA offers the opportunity for you to set aside tax-free money to pay for eligible out-of-pocket health care expenses. Since the HSA is your bank account, the unused funds roll over year to year. If you leave the company, the account goes with you. Consider this your health care 401(k)!
What can I pay for with my HSA?
Your HSA allows you to pay for eligible medical, dental, and vision expenses. This includes your annual deductible, copays, and coinsurance for you and your dependents. Eligible expenses also include prescriptions, glasses or contacts, LASIK, birth control, acupuncture, and more. Review IRS Publication 502 for a complete list of eligible expenses.
How do I enroll in an HSA?
To get started, select the HSA vendor of your choice, apply for an account, and provide your account number to Human Resources. The payroll team will deduct pre-tax funds from your paycheck and deposit them directly into your HSA for use.
How much can I contribute?
Contributions cannot exceed the annual IRS maximums. In 2020, the IRS maximum for individual coverage is $3,550 and for family coverage is $7,100. If you are age 55 or over, you may contribute an additional $1,000.
Are HSAs really tax-free?
Yes! HSAs give you a triple tax advantage: your contributions to the HSA are not taxed, payment of qualified expenses is tax-free, and earnings are tax-free.
However, there are a few rules you need to follow. If you use your HSA funds for expenses the IRS considers eligible, the money remains tax-free. If you use funds for ineligible expenses, you will pay applicable taxes and an excise tax penalty (currently 20%).
How about the fine print?
HSA Eligibility Requirements:
- You must be enrolled in a qualified High Deductible Health Plan (HDHP)
- You cannot be covered under another non-qualified health plan, including your spouse’s Health Care Flexible Spending Account
- You cannot be enrolled in Medicare or Tricare
- You cannot be claimed as a dependent on someone else’s tax return
See plan documents for additional information.