Health Savings Accounts (HSAs)

HSA Overview

What: 

A special, tax-sheltered savings account for medical bills.

Who: 

Individuals who are covered by a qualified high deductible health insurance plan; not covered under other health insurance; not enrolled in Medicare; and not another person’s dependent are eligible for an HSA.

How: 

You make deposits into your HSA, and we’ll provide you a checkbook and/or debit card for you to pay qualifying expenses. You can contribute up to $4,150 if you have individual coverage or $8,300 if you have family coverage in 2024, plus an extra $1,000 if you’re 55 or older anytime during the year. 

Why: 

HSAs allow you to make contributions and earn interest tax free, and your distributions are also tax free as long as they’re used for qualified medical expenses.

Benefits

• Use your HSA to help you pay for any qualified medical expense – from health insurance deductibles and co-payments to certain over-the-counter medications and out-of-pocket expenses.
• Your employer doesn’t own your HSA, you do. So, if you change jobs it will still be with you.
• Your balance rolls over from year to year, so what you don’t spend, you keep.

How does it work?

Q: Are unused amounts carried over to the next year? 

A: Yes

Q: Are earnings withdrawn tax free?

A: Yes, if they are for “qualified medical expenses” as defined by the IRS.

Q: What is a qualified medical expense?

A: Qualified medical expenses are a defined term created by the IRS and could include medical care, prescription drugs, and payment for long-term care.

Examples of qualified expenses are:

• Acupuncture
• Ambulance costs
• Bandages
• Birth control pills
• Contact lenses
• Crutches
• Doctor visits
• Some dental expenses
• Vision care (eyeglasses, contacts, Lasik surgery)
• Hearing aids
• Lab fees
• Prescriptions
• X-rays

Please note some insurance premiums cannot be paid for by HSA funds. For a full list of eligible expenses, review IRS Publication 502.

Q: Does my money in my HSA earn interest?

A: Yes, and your earnings are tax free.

Q: What happens to the money if I die?

A: Your HSA would pass to your surviving beneficiary tax free. If you do not have a named beneficiary, the money is disbursed to your estate and is subject to any applicable laws.

Q: Can I use my HSA money for non-health-related expenses?

A: Yes, but the amount you withdraw will be subject to income tax and, if you are under 65 years old, an additional 20 percent tax penalty on the amount withdrawn.

Source: www.opm.gov/healthcare-insurance/healthcare/health-savings-accounts/frequently-asked-questions

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