Health Savings Accounts

Health Savings Accounts (HSA)

A Health Savings Account or “HSA” is an opportunity to put aside money that is tax deductible up to IRS limits. The funds are used to pay out of pocket qualifying medical expenses when used in conjunction with a High Deductible Health Plan.

Health Savings Accounts are offered through Optum Bank although you may use an existing account. In order to have an HSA you must have a qualifying high deductible plan (HDHP). An HSA is designed to assist you with your health plan to protect you and your family since you are responsible for paying your covered medical expenses up to the deductible as stated in your health plan.

Is an HSA right for you?

If you are enrolled in a qualifying high deductible health plan (HDHP), your HSA can help you and your family plan, save and pay for healthcare. With HSA’s it is important to understand the advantages before you can decide if it is right for you.

  • You will benefit from pre-tax savings. The money you put aside is tax deductible, subject to IRS limits & your savings grow tax-free
  • Premiums for HDHP’s are typically lower than traditional plans. Any money you take out to pay for qualified medical expenses is tax free.
  • You make the choice to “reimburse” yourself for your qualified out of pocket expenses.
  • The money is yours! There is no “use it” or “lost it.”
  • All amounts in your account are fully vested and unspent balances remain there until spent.
  • Your account is portable, meaning your money stays put even if you:
    • Change Jobs
    • Change Medical Plans
    • Become unemployed
    • Move to another state
    • Get Married or Divorced
  • With an HSA, you decide how much you will contribute to your account when you want to use the money, what bank to use or whether or not you want to invest some of the savings.

Click here for more information.

How Does it Work?

Once your bank account is opened, money will be deposited on a pre-tax basis for your qualifying expenses. That money can be sent automatically from your check or you can also make deposits directly.

What items are considered “Qualifying”

  • Doctor visits; Dental care; Vision care; Prescriptions; Chiropractic care and acupuncture, durable medical equipment. To see a full list log onto IRS.gov and a full breakdown of expenses is available.
  • It is important that you retain all medical receipts. Once you log in and register in the OptumBank portal, there will be tools that will assist you with healthcare expense trackers, tax documents, investment options as well as a vault to maintain your online receipts.
  • Monies used for non qualifying expenses are taxable income and subject to an additional 20% IRS penalty.

Click here for a list of qualified HSA expenses.

Eligibility

If you have a qualifying high deductible health plan you may be eligible to contribute to an HSA if:

  • You not covered by any other non-HDHP, such as a spouse’s plan.
  • You not enrolled in medicare.
  • You are not claimed as a dependent on another person’s tax return.
  • You are not enrolled in a general purpose Flexible Spending Plan. You must enroll into a Limited Purpose FSA plan.**

What are the annual limits for 2022?

  • Individual – $3,650
  • Family – $7,300
  • Catch up Contribution (age 55 or older) – $1,000

Note: If you are 55 or older, you can make “catch up” contributions, meaning you can deposit an additional $1,000. This applies to your spouse as well.

**You are not eligible to deposit money into an HSA if you are depositing money into a healthcare FSA in a tax year. You may if you choose open what is called a “Limited Purpose FSA. LFSA can be used to pay for eligible dental and vision expenses.

To learn more about a Health Savings Account speak to your Benefits Specialist.