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HSA
Basics
What Are Health
Savings Accounts?
Health
Savings Accounts (HSAs) are
a new healthcare program. HSAs pair
a high-deductible health insurance plan with a health savings
account to cover medical expenses until the deductible is reached.
- HSAs are "the
better rainy day fund" approach to healthcare.
- HSA contributions
are from pre-tax dollars, and can be made by the company and/or
the individual / employee.
- HSAs are
controlled and owned by individuals / employees.
- HSAs accumulate
from year to year (not use it or lose it), and are portable.
- HSA payouts
for qualified medical expenses are tax-free.
- HSAs accumulated
capital, interest and dividends are tax-free until retirement.
- HSAs are
expected to encourage participants to become better health care
consumers.
- HSAs are
not for everyone.
Click
here for answers to frequently asked questions about HSAs
Health
Savings Accounts are
important new tools for employers and employees to improve their healthcare
options. For a business owner or individual, Health
Savings Accounts are an inexpensive
way to insure family and employees – while reaping tax benefits for
almost every dollar committed to the plan.
HSAs were created to offer individuals a
tax-advantaged way to accumulate savings for medical expenses. Business owners
who offer such a plan to their employees can benefit modestly from tax relief,
and, most importantly, can realize substantial healthcare cost savings on a day-to-day
basis. HSAs are not for everyone. Yet for
the self-employed, and for many other small business employers and their employees, HSAs represent
a breakthrough strategy that can lower healthcare costs today and increase retirement
savings for future health care needs.
To those familiar with IRA, Keogh and 401(K) plans, HSAs operate
in much the same manner, with several important differences. The most important
difference is that money placed into an HSA can
be withdrawn at any time, before as well as after retirement, if the money is
used for medical care expenses. What constitutes a medical expense is pretty
basic. Treating a broken nose is okay. Getting wrinkles removed is not. Equally
as important, money not spent in one year may rollover to the next and even beyond
age 65.
Click here to sign up for an HSA primer
Compare HSAs, HRAs and FSAs
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