Health Savings Account
A Health Savings Account (HSA) is a tax-free savings account that works like an IRA, and it’s linked to a high-deductible health insurance plan. Individuals, their employers, or both, can contribute funds each year to the HSA. Contributions, interest and investment earnings are tax-free. The account owner can use the funds for “qualified medical expenses,’ or simply let the funds grow tax-free through earnings.
HSA Benefits for Individuals
Security - Your high-deductible insurance and HSA protect you against high or unexpected medical bills.
Affordability - You should be able to lower your health insurance premium by switching to a health insurance coverage with a higher deductible. The funds you contribute into your HSA also qualify as a tax deduction on federal income taxes.
Flexibility - You can choose to use the funds in your account to pay for current medical expenses, or save the money for future needs.
Savings - You can grow the money in your account through investment earnings to pay for future medical expenses.
Ownership - Funds remain in the account from year to year, just like an IRA. There are no “use it or lose it” rules for HSAs.
Benefits for Employers
Simplicity - HSAs are self-administered by employees, so you can rest easy knowing that the employees are taken care of.
Employee Satisfaction - Having a Health Savings Account option will enhance your benefits package, attracting prospects and helping to retain current employees.
Choice - You can contribute in a lump sum or any frequency you choose to your employee's HSA; there are no minimum contribution requirements.
Affordability - HSAs can save small business owners up to 40 percent in health care costs through lower premiums.
Tax Advantages - Contributions to an HSA by an employer are exempt from payroll taxes.
Commonly Asked Questions about Health Savings Accounts
Once I open my Health Savings Account, what can I do with the funds? Can I move them at will?
Account owners have full control over the account, and can make all decisions about the HSA, including: - How much money to put into the account & whether to invest any of the money in the account - Which investments to make - Which medical expenses to pay from the account
What happens to my HSA if I lose my job?
Accounts are completely portable, so you can keep your HSA even if you change jobs, change your medical coverage, become unemployed, move to another state, or change your marital status.
All information on this web page is provided by the Small Business Administration. Please visit the SBA website to learn more about the benefits and rules of Health Savings Accounts.
FDIC Member FDIC
Equal Opportunity Lender