What is an HSA?
An HSA is a tax-free medical savings account that offers a different way to pay for qualified healthcare services.
An HSA allows the participant/employee to pay for current healthcare services, save for future healthcare services, and accrue interest without paying taxes on the account’s growth.
The funds contributed to an HSA are not subject to federal income tax.
Who is eligible for an HSA, and is there a contribution limit?
In order for a participant/employee to contribute to an HSA, he/she must be enrolled in a High Deductible Health Plan (HDHP).
For 2022, the minimum deductible and maximum out-of-pocket costs are shown below:
What medical services may I spend my HSA funds on?
Eligible healthcare expenses are governed by IRS Section 213(d).
What if I do not use all of my HSA funds during the plan year?
Funds in an HSA will roll over from year to year.
The participant/employee is able to contribute up to the maximum permitted each year as listed above. A participant/employee will not forfeit funds if he/she leaves his/her employer.
What is an HSA catch-up?
Individuals who are 55 and older may contribute an additional $1,000 per year.
An HRA is a tax-free medical benefit arrangement that allows employers and participants/employees to save on the cost of healthcare. An HRA is an employer-funded healthcare reimbursement plan, whereas the employer sets aside a specific amount of pre-tax dollars that the participant/employee can use to pay for eligible healthcare expenses.