Health Savings Account (HSA)
Health Savings Accounts are only available to active employees on a High Deductible Health Plan (HDHP) per IRS regulations. Our Health Savings Account is managed through EBMS.
An HSA is a tax-advantaged account established to pay for qualified medical expenses for those who are covered under a high deductible health plan. An HSA has maximum allowable contributions annually on a pretax basis depending on if you have individual coverage or family unit coverage. Your HSA can pay for medical expenses that the HDHP does not covered and for other qualified medical expenses, which include most medical care such as dental and dental.
Who does the money in the HSA belong to, my employer or me?
You, as these funds are fully vested when placed in your account and they are portable, meaning you keep your account even after you leave your job. You will use a HealthEquity debit card for payments.
Who can elect a health savings account?
An eligible individual is anyone who is under age 65 and:
- Is covered under a high deductible health plan (HDHP)
- Is not covered by any other health plan that is not a HDHP
- Is not currently enrolled in Medicare or TRICARE
- Has not received medical benefits through the VA during the preceding three months
- May not be claimed as a dependent on another person’s tax return
A person generally qualifies as your dependent for HSA purposes if you claim them as an exemption on your federal tax return.
HSA monies may be used by the employee to reimburse qualified expenses for themselves or for any tax-eligible dependent even if that dependent is not covered by the HDHP. The penalty on taxable, non-medical distributions is 20%, if you use any of the money for nonmedical expenses before age 65.
See IRS Publication 502 for details: http://www.irs.gov/pub/irs-pdf/p502.pdf
What happens after reaching age 65 with an HSA?
You cannot continue to contribute towards your HSA. You can use the HSA funds for nonmedical expenses and you will not incur the 20% penalty; however, you would need to pay income taxes on withdrawn money. Keep in mind you may continue to withdraw funds from your HSA for qualified medical expenses without creating a personal taxable event after attaining age 65.
If you choose to participate in an HSA and you and your dependents also elect to participate in a Flexible Spending Account, you will have a Limited Scope Flex Account. You will not be able to use the flexible spending account for the reimbursement of qualified medical expenses - it may only be used for the reimbursement of vision and/or dental expenses not covered by insurance.
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