A health savings account (HSA) is an account associated with high-deductible HMOs and PPO plans that allows you to use pretax dollars to pay your share of eligible costs for medical, prescription, dental, or vision services that are not covered under your insurance plan. By using the untaxed dollars in your health savings account (HSA) to pay your deductible, copayment, coinsurance, and certain other expenses, you can potentially reduce the overall cost of health care. Your HSA is owned by you, so you can use money in the HSA to pay qualified medical expenses for life – including retirement.
Your HSA balance can grow over years, earning interest, and building savings you can use to pay for healthcare when needed. Funds in your HSA can be used to pay qualified health expenses not covered by your health insurance plan, and they can be saved for future expenses on a pre-tax basis. An insured individual may take out the money that has been saved in an HSA to pay for any additional medical expenses. Funds in an HSA account grow tax-free, so no taxes need to be paid on the withdrawals as long as they are used for eligible medical expenses.
If you establish your HSA account yourself, you may be able to deduct the contributions to your HSA on your federal income tax return. If you have an HSA account sponsored by your employer, the amount that you contribute is not subject to the payroll or income taxes. You can take a tax deduction on contributions that you, or someone other than your employer, makes to your HSA.
HSA contributions are either pretax (if made by your employer) or tax-deductible (if you make the contributions yourself). Tax benefits include the tax-deductible contributions, and account holders are able to grow their HSAs while earning tax-free interest, and also get a tax-free rate of return on investments in their funds. An HSA account provides a little bit of extra flexibility, as your funds can be transferred year-to-year, your account is portable from one job to another, and you can invest the money as it grows tax-free. Your account balance is yours if you leave a government job, and you can keep using it tax-free on health care expenses, or roll it over into another HSA.
You may still be able to use HSA funds for qualified healthcare expenses, but you cannot contribute more to the account unless you enroll in another HSA-eligible HDHP. HSAs are not subject to COBRA continuation, when you leave public employment, you retain the funds in the account, but become responsible for paying any associated HSA fees, and no employer contributions will be made to your account in the future. If you continue contributing to the program after leaving your job, making post-tax payments directly to the FSA Administrator, or if you pay your annual elections balance early prior to leaving the workforce, you can file claims for services performed after leaving your state job.
Only expenses not reimbursable by insurance plans, certain other sources, or HCSA can be deducted from your income tax return. You cannot claim expenses that you received or expect to be reimbursed by a health care plan or another source. Reimbursements made in any one plan year are for only the eligible health services received in the plan year itself.
You may use an FSA to help you pay for eligible health expenses at the beginning of the year, provided that you anticipate contributing as much as you need to pay for them at the end of the year. You can have a limited-use Health FSA that allows you to only pay qualified vision, dental, and after-deductible expenses.
Vision and dental plans operate just like a normal FSA, but the funds are restricted to only for vision and dental expenses. FSAs and HSAs are tax-free accounts that you can use to pay for health care-related expenses. HSAs are often called triple-tax-advantaged, since contributions are tax-free, the money can be invested and grows tax-free, and withdrawals are not taxed if used for qualified healthcare expenses. HSAs have evolved from being a place to stash money for future medical expenses into also being an account in which to build your retirement nest egg.
You can put funds in an HSA on a pre-tax basis to save for both current and future medical expenses, giving you control over how your healthcare dollars are spent. You can also contribute pre-tax funds into an HSA, check with your paycheck servicer to set up. Once you open your HSA AdvantageTM account, the state makes tax-free, year-round contributions at the rate of a percentage of your income each month; you may choose to do the same, but are under no obligation to make any contributions.
An HSA is a tax-advantaged account, meaning that money that you contribute is tax-free. Similar to FSAs, HSAs also let you put money aside in a pretax account, but they operate in slightly different ways. Both the Health Care Flexible Spending Account (FSA) and the Health Savings Account (HSA) can lower your taxes and help you save on health care, dental, vision, and other eligible health care expenses.
A health savings account (HSA) is a tax-advantaged individual savings account that helps individuals who have an HDHP (High Deductible Health Plan) save money on many out-of-pocket health expenses such as physician visits, vision and dental services, and prescriptions. Health savings accounts (HSAs) are personal accounts offered or administered by OptumBanki, and are subject to eligibility requirements and restrictions on deposits and withdrawals in order to avoid an IRS penalty. HSA funds may be used for deductibles, copayments, and coinsurance, over-the-counter medications, feminine hygiene products, and other eligible health care expenses that are not covered under your plan. HSA holders may contribute to a LPFSA for dental and vision expenses, and a Dependent Care FSA for childcare expenses.