HEALTH SAVINGS ACCOUNT (HSA)

A Health Savings Account (HSA)
allows your employees to set aside pretax money to
pay for qualified medical expenses

With an HSA, employees can use this tax-free money to pay for their qualified medical expenses. Employees get access to the full value of the dollar saved for every dollar they contribute.   For more on HSAs and their annual contribution limit click here.

Examples of Qualified Medical Expenses

  • Acupuncture
  • Birth Control
  • Chiropractic
  • Contact Lenses
  • Dental Treatment
  • Prescription Eyeglasses
  • Hearing Aids
  • Lab Work
  • Prescriptions
  • Psychotherapy
  • Orthodontia
  • Radiology
  • Physical Therapy

An HSA Must Be Paired With A Qualified High-Deductible Health Plan (HDHP)

To be eligible for an HSA, and employee must be covered by a Qualified High-Deductible Health Plan and have no other health coverage, such as another health plan, Medicare, military benefits, or medical FSA’s.  For more on what constitutes a Qualified Health Plan click here.

A Health Savings Account is Owned by The Employee and Rolls Over Year-to-Year

All of the money in an HSA (including any contributions deposited by an employer) is owned by the employee even if they leave their job, lose their qualifying coverage or retire. Unlike a Flexible Spending Accounts (FSA), unused HSA funds roll over each year.

Employer Contribution Is Optional

Employer contributions are optional. Employer’s do not have to contribute to an employee’s Health Savings Account.  However if they do contribute, there are tax breaks.

Tax Advantages For Employers

Employer contributions are deductible by the employer as contributions to a health plan. The employer contribution to their employees’ HSAs are not generally subject to employment taxes.