A health savings account (HSA) is a personal bank account just for health care expenses. To open an HSA, you must have a high-deductible health plan (HDHP). An HSA and an HDHP go together:
- An HDHP has a lower premium but requires you to pay more of your health care costs, like higher deductibles and copays.
- You pay for those health care costs with money from your HSA.
People like HDHPs because you pay a lower premium up front and can use pre-tax dollars you deposited in your HSA account to pay for care. You don't have to use up the money every year. The money is yours to keep because it is your bank account. However, you can only use HSA dollars to pay for qualified medical expenses.
The U.S. Internal Revenue Service (IRS) oversees HSAs, and your pre-tax contributions are placed in an FDIC insured account. (FDIC-insured means that the federal government guarantees the safety of the money you deposit in the bank up to $250,000 [as of 2016].) The money you put in and the money you take out is tax-free.
Your account can be set up through any qualified bank.The bank doesn''t have to be connected to your health insurance company.
How do I know if an HSA is right for me and my family?
To get the most value out of an HSA, you have to:
Common ways people use HSAs are to:
- Be aware of your health care costs so you know how much to deposit into your HSA
- Actively manage your care
- Plan and save for health care costs after they have retiredretire to avoid using 401(k) or other retirement funds
- Save for unexpected changes in health care costs at any time in their lives
- Cover premiums if they''ve lost their job (COBRA) or have retired (along with some other specific situations)
- Have more freedom in their health care spending on equipment, treatments and providers
- Pay for the qualified medical expenses of a spouse or child, even one not covered on the HDHP or HSA plan
Can I get an HSA or HDHP through my employer?
If your employer offers Asuris plans, their selection may include HSA or HDHP plans. Check with your human resources department or management team.
Who can open an HSA?
You can open an HSA if:
- You have a high-deductible health insurance plan (HDHP) that is HSA qualified by federal guidelines
- Your HDHP is your only health plan (aside from a separate dental or vision plan)
- You can't be claimed as a dependent on another person's tax return
- You are not eligible for or enrolled in Medicare
- You are not selecting a tax credit which makes your deductible less than the IRS allows for an HSA -qualified plan
How does an HSA save me money on health care?
Using an HSA with your high-deductible health plan may save you money through reduced taxes and lower premiums. Also, when you tell providers you are paying out of your own pocket for care instead of filing an insurance claim, you can often arrange a cash discount.
Save money each year on taxesYou can deposit money into your HSA tax-free and take it out for qualified medical expenses without paying taxes.Plus, you can invest your HSA balance just like your individual retirement account (IRA). Any interest or investment income will also be tax-free, though you can spend it only on qualified medical expenses.
Save money each month on premiumsHigh-deductible health plans that let you use an HSA cost less in monthly premiums. That's because you are sharing more of the cost, such as copays and deductibles.While you can't use your HSA funds to pay for your monthly premiums, you can use the funds to pay for a number of qualified medical expenses that are not covered by your HDHP, such as eye exams, eyeglasses and contact lenses, dental cleanings, fillings and even qualified medical expenses for a spouse or child.
How do I get an HSA?
If you buy a plan that is HSA-qualified and pick HealthEquity (our preferred partner) when you apply, an HSA bank account is automatically created for you. HealthEquity will send you a welcome kit to help you access your account. Or, you can choose to work with your own bank—it's up to you.
Managing your HSA through HealthEquity
Through our tie to HealthEquity, you can have your claims information automatically sent to HealthEquity to let you manage your account 24/7. You can also use online tools such as:
- Document storage (for receipts)
- Bill pay to providers
- Apps to manage your account from your smartphone
If you use HealthEquity, be sure to check your preferences by signing in to asuris.com and going to My account.
Learn more about HealthEquity online or call 1 (866) 346-5800.
Managing your HSA through a bank of your choice
You can also set up an HSA with our referral partner, HSA Bank, for a discounted rate. And you always have the option to open an HSA with any IRS-qualified bank that you choose.
How much money can I put into an HSA each year?
There's a maximum amount that the IRS allows you (and your employer) to contribute to any HSA in a calendar year.For 2016, you can contribute up to:
For 2017, you can contribute up to:
- $3,350 for an individual HSA
- $6,750 for a family HSA
Also, if the primary member of the high-deductible health plan is age 55 or older, you may deposit up to an additional $1,000.
- $3,400 for an individual HSA
- $6,750 for a family HSA
How do I put money into my HSA?
You can put money into your HSA as easy as you make deposits into a bank account. For members with a HealthEquity HSA, you deposit money online or send checks to HealthEquity.If you get your insurance through your employer, you can have payments deducted from your paycheck and deposited to your HSA account automatically. These deposits are made on a pre-tax basis. That means they may not be counted as part of your gross earnings. Basically, you have less income, so you pay lower taxes.
How do I spend money from my HSA?
Your HSA comes with a debit card, just like other bank accounts, or you can request checks. Use the card or the checks to pay for qualified medical expenses at the time of purchase. You can also reimburse yourself—that is, pay out of pocket, then pay yourself from your HSA. As long as you spend your HSA funds only on qualified medical expenses, you won't pay income tax on that money.While you can't open an HSA in a child's name, you can use money from your HSA to pay for medical expenses if you or your spouse claims that child as a dependent on a tax return.
Spend only on qualified medical expensesThe IRS decides which expenses are considered HSA-qualified medical expenses, but the list includes:
In general, your premiums, nonprescription medicine and some other expenses do not count as HSA-qualified medical expenses.Note: If you spend HSA money on nonqualified medical expenses, you'll have to pay income tax on that amount. Plus, if you're under 65, you also pay a penalty to the IRS. So, it's important to check the qualified medical expense list when making decisions about how to use your HSA money. You can see a list in IRS Publication 502.
- Office visit copayments
- Your deductible
- Prescription drugs
- Many treatments that may not be covered by your insurance, such as buying contact lenses
What happens to the money in my HSA if I don't spend it all in a year?
Money deposited into the HSA is yours and remains in your account until you spend it. Use your HSA to save money while you're healthy and don't need medical care. Your money will grow tax-free and be there to help you pay for future medical expenses.The funds will become available to you for nonmedical expenses in retirement (after age 65) without having to pay a penalty, but you will have to pay income taxes on any nonqualified medical expenses.
What happens to my HSA if I'm no longer enrolled in a high-deductible health plan?
While you need to be enrolled in a qualified high-deductible health plan in order to start or contribute to an HSA, you can use funds from your HSA for qualified medical expenses whenever you want—even if you're no longer enrolled in a high-deductible health plan.While you can't open or contribute to an HSA if you're eligible for Medicare, you can still use funds from your HSA when you transition to Medicare.
How do I make sure my HSA contributions get into my tax return?
At the end of the year, you'll receive a report in the mail from the bank that holds your HSA. Use this report to prepare your tax returns.
My employer offers a flexible spending account (FSA). How is that different from an HSA?
FSAs and HSAs both let people save pre-tax money to pay for qualified medical expenses. The biggest differences between the two are that:
- An FSA is established through an employer.
- An FSA can be used with health insurance, but you don't have to have health coverage to have and use an FSA.
Other differences are:
- An FSA usually has money added into it through pre-tax deductions from your paycheck. However, your employer can also contribute to your FSA.
- Money from an FSA can pay deductibles, copays and coinsurance, as well as qualified medical expenses that are not covered by health insurance. It can cover qualified care of your dependents and spouse. It can also cover over-the-counter medications if a doctor prescribes them.
- You lose any money in your FSA that you do not use by the end of the year. Your employer can either allow for a grace period of up to two and a half extra months to use the money in your FSA or it can let you carry over up to $500 per year to use in the following year (or it can offer neither option).
- An FSA is limited to $2,250 (for 2016) per year per employer. Spouses also can put up to $2,550 in an FSA with their employers.
- You put money into an FSA through a deduction from each of your paychecks during the year. However, you can use the full annual contribution immediately at the beginning of the year (or after you make your first contribution). If you use the full amount and then quit, are fired or are laid off before to the end of the year, you do not have to pay the FSA money back to your employer.