Health Savings Account

Advantages of an HSA

• HSA funds can be used to pay for medical, dental, vision, alternative medicine, long-term care premiums, COBRA, and other covered services.
• When used for eligible healthcare expenses, HSA funds are tax-free.
• Contributions are tax-deductible and earnings grow tax-free.
• Unlike an FSA, HSA funds roll over from year-to-year.
• HSA accounts are portable and yours to keep regardless of your employer or insurance carrier.
• HSAs can be used as a retirement strategy as deposits can be invested in mutual funds.
• You also elect to contribute to a limited-purpose FSA, to be used for qualified dental and vision expenses, to maximum your tax savings.

Eligible Expenses

HSA funds can be used on eligible Medical, Dental, and Vision expenses, prescription copays, acupuncture and chiropractic care (whether or not covered under the Medical plan), and labs and X-Rays. You can search for eligible expenses with Optum here. 

Ownership

Please know, your HSA is an individual account owned by you as the employee. According to IRS guidelines, in order to qualify for an HSA account you must:

• Be covered under a qualified High Deductible Health Plan (HDHP)
• Not have other “impermissible coverage” (i.e., coverage that provides medical benefits before the HDHP statutory minimum deductible is met, with limited exceptions — e.g., preventive care)
• Not be enrolled in Medicare.
• Not be claimed (or eligible to be claimed) as a dependent on someone else’s tax return.

It is the onus of you as the employee to ensure you meet the requirements noted above to open and contribute to an HSA. Should you have further questions on tax liability and limits to your individual account we encourage you to consult with your tax advisor.

Eligibility

Domestic partners are not eligible to utilize funds from a health savings account (HSA). HSA’s are governed by IRS guidelines. The IRS does not recognize domestic partner status as a qualified beneficiary; therefore, reimbursement for an eligible domestic partner’s health care expenses cannot be administered through an HSA (an exception to this is if you’ve become your domestic partner’s caretaker and they are a dependent on your tax return). If you have further questions on tax liability and limits to your individual account please consult with your tax advisor.

What’s the difference between Healthcare and Limited-Purpose Flexible Spending Accounts (FSAs) and a Health Savings Account (HSA)?

While these plans can all be used for eligible healthcare expenses, it’s important to note the differences illustrated in the chart below.