Health Savings Account – How an HSA Works
You and your employer can deposit money into your HSA account, up to an annual per-person or family limit set by the IRS. When you enroll, an account will be created for you at a sponsor bank. You’ll be given access to a secure, easy-to-use web portal where you can track your account balance, view your investment accounts and submit requests for reimbursements.
Top 5 Reasons HSAs are so Popular
HSA – Health Savings Account
A Health Savings Account is a popular option for employees who elect one of the increasingly prevalent High Deductible Health Plans. As a tax-advantaged savings account, an HSA is used in combination with a High Deductible Health Plan, or HDHP. Employees can use their HSA dollars to cover any qualified medical expense.
- HSAs are triple-tax advantaged: funds saved in the account are tax-exempt, interest and earnings gained in the savings account are tax-exempt, and payments made from the HSA for qualified expenses are tax-exempt
- Participants own their individual HSAs and it can travel with them from employer to employer, in retirement and during unemployment
- HSA contributions roll from year to year; there is no deadline for using the funds and the FSA use-it-or-lose-it rule does not apply
- HSAs can become a supplemental retirement account. While health expenses continue to be eligible expenses for retirees, in addition, retirees can pay for any expense from their HSA with no additional tax penalties
- B3PA has partnered with HealthCare Bank to act as the HealthCare Bank for our HSA clients HeathCare Bank offers a full suite of investment options for HSA account holders with account balances exceeding $2,000
- B3PA fully integrates HSA accounts with our Limited or Post-Deductible FSA Options, allowing your employees to get even more tax advantage reimbursement savings
- The Provider Pay and Claims Integration features B3PA offers which are most advantageous to HSA clients using an HSA
What You Can Do with an HSA:
- Earnings are tax-advantaged. Any earnings on your HSA funds aren’t subject to taxation with the B3PA HSA.
- Funded by Employee Contributions. Pre-tax contributions, made by the employee, fund the account.
- Outside Contributions May be Made. Employers and other third parties are allowed to contribute to the employee’s HSA.
- Use-It-or-Lose-It Rule Does Not Apply. Unlike the Flexible Spending Account, dollars unused at the end of the plan year are not lost.
- Employee Determines Amount Withheld Each Paycheck. The employee is in control of the dollar amount withheld, prior to payroll taxes, each month to fund the account.
- You Can Add Flexibility & Depth to Your Plans. Health benefits and retirement plans can be improved with secure, FDIC-insured financial accounts.
- Save Money on Health Insurance Premiums. Save by offering HSAs, along with high deductible health plans.
- Healthier Lifestyle Choices Can Be Promoted. Through increased employee involvement and use of 100% covered preventative care, healthier lifestyle choices are encouraged.
- Go Green! Digital online claims, statements, and direct deposit reimbursements contribute to a paperless lifestyle.
Limited and Post-Deductible Options for HSA Participants
Employees who elect a Health Savings Account (HSA) in conjunction with a High Deductible Health Plan are ineligible for a full-fledged FSA. There are still FSA options for these employees:
Limited Purpose FSA: Eligible to reimburse only dental and vision expenses
Post-Deductible FSA: Reimburses dental and vision expenses only, until the IRS statutory deductibles are met where it converts to a full FSA, able to reimburse all FSA eligible expenses.
Combination Limited Post-Deductible FSA: Reimburses dental and vision expenses; after the IRS statutory deductibles are met, eligible to reimburse all FSA expenses