Health Savings Account (HSA)
If you enroll in the High Deductible Health Plan (HDHP), chances are you are eligible to open a Health Savings Account (HSA) with [plan Name].
Current HSA accountholders will be able to continue using the branded HSA cards until expiration. At that time, you will automatically receive a generic branded HSA card in the mail.
New HSA 5/1 accountholders will receive a generic branded HSA card in the mail.
An HSA is a personal savings account which you can use to pay qualified out-of-pocket medical expenses with pre-tax dollars. You own and control the money in your HSA. The money in your account (including interest and investment earnings) grows tax-free and, as long as the funds are used to pay for qualified medical expenses, they are spent tax-free.
Unlike a Flexible Spending Account, there is no “use-it-or-lose-it” rule—you do not lose your money if you don’t spend it in the calendar year and there are no vesting requirements or forfeiture provisions. The account will automatically rollover year after year. Since it is an individual account, if you change health plans or jobs, the balance is yours to keep.
You are eligible to open and contribute to an HSA if you:
- Are enrolled in an HSA-eligible HDHP
- Are not covered by other non-HDHP, such as your spouse’s health plan, Health Care Flexible Spending Account, or Health Reimbursement Arrangement
- Are not eligible to be claimed as a dependent on someone else’s tax return
- Are not eligible for Medicare or TRICARE
- Have not received Veterans Administration benefits
You can use the money in your HSA to pay for qualified medical expenses now or in the future. Your HSA can be used for your expenses and those of your spouse and dependents, even if they are not covered by the HDHP.
Maximum Contribution:
The annual contribution maximum is based on the coverage option you elect.
- Individual $4,150
- Family (filing jointly) $8,300
Employees age 55 and older are allowed to make an additional annual “catch-up” contribution of up to $1,000.
For more information about HSA's:
Optimizing Your HSA
If enrolled in the [name] Medical Plan, you may be able to benefit from one of the best tax breaks available: the health savings account (HSA).
It pays to find out whether you’re eligible to contribute to an HSA and the three ways to maximize its “triple tax benefits."
- Contributions reduce your taxable income without having to itemize deductions.
- Growth of the account is tax-deferred.
- Distributions for qualified medical expenses—for you and your family—are tax-free.
Unlike Flexible Spending Accounts (FSAs), the funds in an HSA are not “use-it-or-lose-it.” They roll over from year to year, and the account is yours even if you change employers or health plans.
Four reasons to love an HSA
01
Tax-free. No federal tax on contributions, or state tax in most states. Withdrawals are also tax-free as long as they’re for eligible healthcare expenses.
02
No “use it or lose it.” Your balance rolls over from year to year. You own the account and can continue to use it even if you change medical plans or leave the company.
03
Use it now or later. Use your HSA for healthcare expenses you have today or save it to use in the future.
04
Boosts retirement savings. After you retire, you can use your HSA for healthcare expenses tax-free, or for regular living expenses, taxable but no penalties.
Flexible Spending Account (FSA)
A Flexible Spending Account (FSA) allows you to pay for a variety of out-of-pocket health care and dependent care expenses pre-tax. Putting money into an FSA before you pay taxes on it saves you money by lowering your taxable income. The result? You pay less in taxes each year.
There are two types of FSAs available to you through:
Healthcare Flexible Spending Account Set aside pre-tax dollars from your paycheck to cover eligible healthcare expenses such as eyeglasses, contacts, copays, deductibles, prescription medications, and orthodontia. The entire amount you set aside is available to use on the first day of your plan year. FSA Store
Dependent Care Flexible Spending Account
Set aside pre-tax dollars from your paycheck to cover eligible dependent care expenses such as day care, babysitting, and general-purpose day camps for your dependents under the age of 13 while you are at work. You can also use the funds to pay for adult day care services for dependent adults who are unable to care for themselves. You will be reimbursed for eligible expenses as they are incurred and as funds are deposited into your account.
Set aside healthcare dollars for the year
- A healthcare FSA allows you to set aside tax-free money to pay for healthcare expenses you expect to have over the coming year
How health care FSA works
- You estimate what you and your family’s out-of-pocket costs will be for the coming year. Eligible expenses include office visits, surgery, dental and vision expenses, prescriptions, even eligible drugstore items.
- You can contribute up to the annual limit set by the IRS. Contributions are deducted from your pay pretax, meaning no federal or state tax on that amount.
- During the year, you can use your FSA debit card to pay for services and products. Withdrawals are tax-free as long as they’re for eligible healthcare expenses.
Additional Resources:
Transportation
HSA & FSA Explained
Employees can put dollars away tax-free to pay for medical expenses via Flexible Spending Accounts (FSA) and/or Health Savings Accounts (HSA).
It is important to understand the differences between the two account types and choose the account that is right for you.
HSA:
In order to contribute to an HSA, employees must be covered under a qualified High Deductible Health Plan (HDHP). Per IRS guidelines, a HDHP may not allow for first dollar coverage, outside of preventive care, until the member satisfies their deductible.
While contributions can only be made while enrolled on a HDHP, these dollars are available for use at any point in the future, regardless of coverage. The dollars are owned by the employee, can be invested with no tax on the growth of the assets, and they never expire.
FSA:
Employees may contribute to an FSA regardless of health plan enrollment, however, if the funds are not used by March 15th of the following year, the funds are forfeited.
There are 3 types of FSA accounts: Stoic is offered only the first two options. The last option does not apply for Stoic employees.
- Healthcare FSA for medical expenses
- Dependent Care FSA for expenses tied to care of qualified dependents
- Limited Spending FSA for dental and vision expenses while also contributing to a HSA