Health Savings Accounts
HSAs are quickly becoming popular throughout the country. From January 2008 to January 2009, the number of HSA accounts almost doubled, increasing 46.1%. Equally as impressive, the assets in those accounts grew 62.6%. Palmetto Benefit Management began selling Consumer Driver Health plans when they first took form in 1999 as Medical Savings Accounts. It was clear to us then that this was the direction that market was heading. Currently, approximately 55% of our clients have a Health Savings Account as an option for their employees, and our agency’s own coverage is an HSA plan.
Below we have included some basic information about HSA accounts.
- Health Savings Accounts (HSAs) are tax-advantaged savings accounts where funds grow tax-free to help pay for medical expenses.
- Must be paired with a Qualified High Deductible Health Plan (QHDHP).
- Created to help give control back to consumers and lower healthcare costs by providing more incentive to shop carefully for healthcare services.
- HDHPs generally have lower monthly premiums than traditional plans.
- An HSA is the employee’s account. If employment terminates, any accumulated H.S.A funds goes with the employee.
- The money rolls over every year. There is no "use it or lose it" provision.
Contributions
- Contributions cannot exceed the IRS Contribution Limit.
- The full limit may be contributed regardless of the start date of coverage for the HDHP.
- Anyone can make a contribution to an HSA: the employee, the employer, a third-party, or all of the above.
- Contributions are tax deductible.
- If the employer contributes to an HSA, that contribution is done on a pre-tax basis.
- Any pay-roll deductions through Section 125 for an employee are also on a pre-tax basis.
- A one time tax free rollover is allowed from an existing FSA or HRA account into the HSA account provided certain conditions are satisfied.
- A one time tax free trustee-to-trustee transfer is allowed provided certain conditions are satisfied.