HSA Consumer Fact Sheet
What’s an HSA
A health savings account (HSA) is a tax-advantaged account that works in conjunction with an HSA-eligible health plan that meets IRS guidelines and allows the participant to save tax-free money for eligible medical expenses. Money in an HSA rolls over year after year and is owned by the participant even if they change jobs or health plans. And it covers eligible expenses for you, your spouse and your dependents. Which means you could pay less in taxes and keep more spendable income.
How your HSA works. In three easy steps.
- When you enroll in an HSA qualified-plan, a Health Savings Account will be created for you at a sponsor bank. And you’ll have access to a secure, easy-to-use web portal where you can track your HSA account balance, submit requests for reimbursements, and much more.
- Once enrolled, you and your employer can deposit money into your HSA account, any time, up to IRS limits.
- Depending upon your employer, you may also also receive a convenient benefits debit or HSA Card. It works just like any other credit card, but you use it to pay for eligible health purchases, products and services, and payments are automatically taken from your HSA account. With no out-of-pocket costs and no receipts to submit.
Why an HSA makes smart sense.
•Your HSA is exactly that: Yours. And themoney in your HSA account stays with you,even if you change jobs.
•The money you put into your HSA is tax-free, both when you put it in and when youtake it out to cover qualified medicalexpenses. That means an HSA could reduceyour taxable income.
•The money in your HSA grows tax-free.Once your balance reaches the investmentthreshold, you can begin investing inmutual funds. If you earn money on yourinvestments, you don’t pay income tax onthat money, either.
•The HSA money you spend is tax-free, aslong as it goes toward eligible medicalexpenses.
•Your HSA money is yours to withdraw anduse at any time for eligible medicalexpenses.
•When you turn 65, you can withdraw anduse your HSA funds, tax-free, for qualifiedmedical expenses. And when used for non-eligible purposes, your HSA funds aresubject to ordinary tax rates
A few other things to note about an HSA
Eligibility rules apply.
To deposit money into an HSA, you must be enrolled in an HSA-eligible health plan. You are eligible if:
oYou are covered under an eligible high-deductible health plan (HDHP).
oYou are covered by no other healthcoverage, unless it is permissible coveragelike vision or dental.
oYou are not enrolled in Medicare.
oYou cannot be claimed as a dependent onsomeone else’s tax return.
[Some other restrictions apply. Please consult your tax, benefits or financial advisor.]
Contribution limits are determined every year by the IRS.
oFor 2020 you can deposit up to $3,550 ifyou have individual coverage and $7,100if you have a family policy. The IRS alsoallows you to make an extra catch-updeposit of $1,000 if you are 55 or older.
oYou can make contributions all the wayup to the tax-filing deadline (usuallyApril 15) and still get tax credit for theprevious year.
A Health Savings Account can give you peace of mind