While Health Savings Accounts (HSAs) have been around for decades, relatively few people have one. Most participants praise HSAs because of the perks they provide -- here’s why.
Any money you (or your employer) contribute towards your HSA is pre- federal, state, and payroll (FICA) tax, creating a significant tax-savings venue. Contributions can be made at any time during the calendar year, up to the calendar year maximum for single or family coverage.
Unlike the more commonly-used FSA (aka “flexible spending account,” “flexible spending arrangement,” “flex spending,” or “cafeteria plan”), all monies contributed into an HSA roll over from year to year.
The best part is that neither the IRS nor your employer can touch this money because YOU own it. If you change your job or change your health plan, the money in the account is still yours to be used for qualified expenses.
You aren’t just limited to investing money in a 401(k) or IRA; monies contributed into an HSA are also invested and earnings are tax-free. Then, at age 65, you can use the money from your HSA towards *any purchase (medically-related or not), similar to a traditional IRA.
*Please note that any non-medical expenditure will be treated as taxable income.
Whether or not you have dental or vision insurance, you can use HSA contributions to pay for such expenses tax free!! You can also use this money for nontraditional forms of healthcare such as acupuncture, acupressure, chiropractic care, Lasik’s, driving expenses to receive medical care, and practically any other medically-required expense.
See the full IRS Publication of tax-favored health expenses here.
If you’ve been waiting to try an HSA-qualified plan because you don’t want to pay any out-of-pocket costs there's no reason to wait. ACA regulations require all qualified plans, including the required High Deductible Health Plan that must accompany an HSA, to cover annual exams, well child checks, and immunizations at 100%.
This means you have no out-of-pocket costs for preventative care, even with a high deductible health plan.
At Stratus HR, we make the HSA administration easy for employers by doing all the background work to qualify for a nontaxable plan, setting up pre-tax deductions for employees, and making contributions directly to the HSA institution of the employee's choice. For more information, or to get started with an HSA, please talk with your certified HR expert.
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