HSA - Health Savings Account

A Health Savings Account or HSA 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 combined with a High Deductible Health Plan or HDHP. As a result, employees can use their HSA dollars to cover any qualified medical expense.

An HSA is a health savings account offered as part of a high-deductible health insurance plan and helps pay for out-of-pocket medical expenses. In 2022, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. In 2023, the minimum deductible has been set for $1,500 for an individual and $3,000 for a family.

As of the 2022 tax year, you can contribute $3,650 individually or $7,300 for a family. HSAs can become supplemental retirement accounts. While health expenses continue to be eligible expenses for retirees, addition, retirees can pay for any expense from their HSA with no additional tax penalties. In 2023, you can contribute $3,850 individually or $7,500 for a family.

B3PA has partnered with HealthCare Bank to act as the Health Care Bank for our HSA clients. Health Care Bank offers a full suite of investment options for HSA account holders with account balances exceeding $2,000. In addition, B3PA fully integrates HSA accounts with our Limited or Post-Deductible FSA Options, allowing your employees more tax advantage reimbursement savings.

The Provider Pay and Claims Integration features B3PA offers which are most advantageous to HSA clients. For example, a Health Savings Account is a popular option for employees who elect one of the increasingly prevalent High Deductible Health Plans.

HSA Advantages

Earnings are tax-advantaged. Any earnings on your HSA funds aren’t subject to taxation with the B3PA HSA.
Employee contributions fund them—pre-tax contributions the employee makes fund the account.
Outside contributions may be made. Employers and other third parties can 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.
- The employee determines the amount withheld each paycheck. The employee controls the dollar amount withheld before payroll taxes to fund the account each month.
- You can add flexibility & depth to your plans. Secure, FDIC-insured financial accounts can improve health benefits and retirement plans.
- Save money on health insurance premiums. Save by offering HSAs, along with high deductible health plans.
Healthier lifestyle choices can be promoted. Healthy lifestyle choices are encouraged through increased employee involvement and 100% covered preventative care.
Go Green! Digital online claims, statements, and direct deposit reimbursements contribute to a paperless lifestyle.
Participants own their individual HSAs and 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 supplemental retirement accounts. While health expenses continue to be eligible expenses for retirees, additionally, 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.

Notice Update

Due to the nature of this public health emergency and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services are received. Items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP will be disregarded for purposes of determining the status of the plan as an HDHP.

You and your employer can deposit money into your HSA account up to an annual per-person or family limit set by the I.R.S. An account will be created for you at a sponsor bank when you enroll. In addition, you’ll be given access to a secure, easy-to-use web portal to track your account balance, view your investment accounts and submit reimbursement requests.

HIGH DEDUCTIBLE HEALTH PLANS AND EXPENSES RELATED TO COVID-19

To facilitate the nation’s response to the 2019 Novel Coronavirus (COVID-19), this notice provides that, until further guidance is issued, a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) under section 223(c)(2)(A) of the Internal Revenue Code (Code) will not fail to be an HDHP under section 223(c)(2)(A) merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible (self only or family) for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual under section 223(c)(1) who may make tax-favored contributions to a health savings account (H.S.A.).

Part of the response to COVID-19 is removing barriers to testing for and treatment of COVID-19. Due to the nature of this public health emergency and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services are received. Items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP will be disregarded for purposes of determining the status of the plan as an HDHP.

BACKGROUND

Section 223 of the Code permits eligible individuals to deduct contributions to H.S.A.s.1 Among the requirements for an individual to qualify as an eligible individual under section 223(c)(1) is that the individual is covered under an HDHP and has no disqualifying health coverage. As defined in section 223(c)(2), an HDHP is a health plan that satisfies specific requirements, including requirements concerning minimum deductibles and maximum out-of-pocket expenses.

Due to the unprecedented public health emergency posed by COVID-19 and the need to eliminate potential administrative and financial barriers to testing for and treatment of COVID-19, a health plan that otherwise satisfies the requirements to be an HDHP under section 223(c)(2)(A) will not fail to be an HDHP merely because the health plan provides medical care services and items purchased related to testing for and treatment of COVID-19 before the satisfaction of the applicable minimum deductible. As a result, the individuals covered by such a plan will not fail to be eligible individuals under section 223(c)(1) merely because of the provision of those health benefits for testing and treatment of COVID-19. In addition, tax-favored contributions may also be made on behalf of eligible individuals by their employers. See Q&A 19 of Notice 2004-2 (2004-2 I.R.B. 269).

This guidance does not modify previous guidance concerning the requirements to be an HDHP in any manner other than concerning the relief for testing for and treatment of COVID-19. Vaccinations continue to be considered preventive care under section 223(c)(2)(C) for purposes of determining whether a health plan is an HDHP. This notice allows HDHPs to provide health benefits for testing and treatment of COVID-19 without applying a deductible or cost sharing. Individuals participating in HDHPs or any other type of health plan should consult their particular health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost sharing.

DRAFTING INFORMATION

The principal author of this notice is Jennifer Solomon of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). However, other Treasury Department and I.R.S. officials participated in its development. For further information on the provisions of this notice, contact Jennifer Solomon at (202) 317-5500 (not a toll-free number).