HSA

Health Savings Account

What is a Health Savings Account?

Health Savings Accounts (HSAs) are designed to help individuals pay for future qualified medical and retiree health expenses on a tax-free basis.

The new Health Savings Account (HSA) combines the best of both the FSA and HRA. The new HSA will allow for contributions to be made on a pre-tax basis by an employee or their employer. Any unused balance in the account will be rolled forward to the next year.

These accounts can only be established by eligible individuals. Participation is limited to those individuals who are participating in a statutorily defined High Deductible Health Plan (HDHP and are not covered under another health plans. HSA funding can come from employers, eligible individuals or both. HSAs may be offered under an employer’s cafeteria plan thereby allowing employees to contribute to an HSA with pre-tax salary reductions.

Unused contributions rollover from year to year (even if offered under the cafeteria plan) and are not lost when an employee moves from one employer to another.

Distribution (reimbursements) from an HSA are always excluded from an individual’s gross income to the extent the distributions are for medical care as defined by Code Section 213(d). If distributions occur for other reasons, taxes may apply.

• Employee Contributions made through the employer’s cafeteria plan; saving the employer 7.65%
• Open and fund the employee’s HSA account by simply running your payroll
• Can be used with any health insurance carrier’s qualified High Deductible Health Plan (HDHP)
• Employer contributions are deductible
• Contributions can be made by employees and/or employers