Health Savings Account

Understanding Health Savings Accounts

A Health Savings Account (HSA) is one of several options used to pay for health care expenses. With an HSA, employees with a High Deductible Health Plan use pre-tax money to pay for qualified medical expenses. Employers benefit from increased tax and premium savings. Employees benefit by retaining a portable HSA savings account regardless of their employment status.

A Health Savings Account is an account established exclusively for the purpose of paying qualified medical expenses incurred by the account beneficiary and/or qualifying dependents. Health Savings Accounts allow employers and employees to make tax-free payroll contributions to the HSA Account to pay for certain out-of-pocket medical expenses. By paying for these expenses on a pre-tax basis, employees increase their take-home pay without costing the employer more money and the employer saves on payroll taxes for all participating employees.

An individual may establish a Health Savings Account (HSA), only if they are first covered under a High Deductible Health Plan (HDHP) and are not currently enrolled or participating in a Health FSA or HRA that may reimburse the same types of expenses.

How an HSA Works

Pre-tax funds are deducted via payroll deduction and are deposited into a financial institution custodial account. When a qualified expense is incurred, the employee requests reimbursement from the HSA custodial account to pay for the expense. This "request" can be handled in a variety of ways; customarily both checks and debit cards are made available to HSA account holders.

Qualified Expenses

Qualified medical expenses include costs for medical care as defined in Section 213(d) of the Internal Revenue Code, but only to the extent the expenses are not covered by insurance or otherwise. Generally health insurance premiums are not qualified medical expenses except for the following: qualified long term care insurance, COBRA continuation health care coverage, and health care coverage while an individual is receiving unemployment compensation. The qualified medical expenses must be incurred only after the HSA has been established.

How Benefit Advantage Can Help

Benefit Advantage can offer transparency and reporting on account utilization. We also have the ability to offer a “stacked card” or multiple accounts on one card.

Benefit Advantage can offer your employees the opportunity to pay for medical expenses with their HSA funds or money from a limited purpose FSA or HRA with one card.

As an employer you have the ability to consolidate your benefit needs with one vendor and control how those benefit dollars are being utilized.