HSA 101 A Quick Overview of the Health Savings Account Basics - - PowerPoint PPT Presentation

HSA 101

A Quick Overview of the Health Savings Account Basics

Agenda

• Health Savings Account Features
• HSA Eligibility
• Contributions
• Tax Information
• Distributions
• HSA-Qualified Expenses
• Paying for Medical Services
• Resources

There are two components to the HSA solution:

High gh-Ded Deductible H e Health I Insur surance P e Plan ( (HDH DHP) paired with a Health h Saving ngs a accoun unt ( (HSA SA)

Health Savings Account Plan High Deductible Insurance (HDHP) Health Savings Account (HSA) Helps pay your deductible Tax-deductible deposits Tax-deferred growth Tax-free for medical care Protects you from big medical bills

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Health Savings Accounts

HSA Key Features



Use HSA dollars to pay for medical expenses tax-free



Funds roll over year to year



Funds are portable



HSAs are owned individually



No “use it or lose it” rule



HSAs earn interest



Funds can be invested



HSAs can build up significantly – no balance limit

Health Savings Accounts

HSA Eligibility

• Must be en

e enrolled i in a an HSA-qu qualif lified ied H High-Deduc uctible ible He Health th Pl Plan ( (HD HDHP)

• Cannot be cover

ered ed b by a any o

• ther

er i insurance e that reim imburses es f for h healt lth e h expe penses es (including a medical FSA)

• Cannot be enr

nrolle lled i in any p part o

• f Me

Medic dicare o

• r Me

Medic dicaid id

• Cannot be claim

imed d as a a d depe epend ndent on another person’s tax return

• Must be over 18 years of age

To open and/or continue contributing to a Health Savings Account, the account holder must meet this criteria:

Health Savings Accounts

2019 HSA Contribution Limits

No Note: Individuals over 55 years old can contribute an additional $1,000 annually to their HSAs.

201 2019

Self $ 3,500 Fa Family $ 7,000

Health Savings Accounts

IRS Contribution Rules

• HSA Contributions are not subject to income tax
• Contributions can be made by anyone
• You can change your contributions at any time throughout the year
• Contributions in excess of the allowable limits must be withdrawn

(otherwise incur a 6% excise tax and claim as income)

• Eligible individuals ages 55 or older may contribute “catch-up”

contributions of $1,000 e 00 each ye year until enrolling in Medicare (one catch- up per account)

Health Savings Accounts

How HSA Contributions Impact Taxes

• HSA c

contributions a ns are e exem empt f from t the he follo

• llowing payroll

ll t taxes:

• Social Security
• Medicare
• Federal income tax
• State income tax/unemployment tax (with

the exception of California)

• Pre-tax contributions facilitated by an

employer are documented on an employee W-2 in Box 12 with a Code “W.”

Health Savings Accounts

Annual Tax Documentation

IRS Form 8889: 8889: Account holders utilize this form to file taxes. All information to file taxes is available through your bank account information and your employer W-2. IRS Form 1099 1099-SA SA: Details all distributions from the HSA. Customer and IRS receive by January 31. IRS Form 5498 5498-SA SA: Details all contributions into the HSA. Customer and IRS receive by May 31.

Health Savings Accounts

What Can You Do with Your HSA Dollars?

• According to IRS guidelines, funds within your HSA can be used fo

for qualif ifie ied m medic ical ex expenses es (See https://www.irs.gov/pub/irs-pdf/p502.pdf Publication 502).

• HSA dollars may

y be used ed b by the a e account h holder er, t the a e account holder’s s spouse, e, a and a any t y tax ax depen enden ents.

• Distributions can

an b be taken en at at a any t y time; HSA reimbursements can be taken for expenses from prior years as long as the account was already established.

• Save y

your r receip ipts! ! Account holders are responsible for maintaining receipts to prove HSA funds were used for qualified medical expenses if audited by the IRS.

Health Savings Accounts

Qualified Medical Expenses

• Doctor and hospital visits
• Medical equipment
• Dental care, braces, dentures
• Vision care, glasses, contacts
• Medications, including many
• ver-the-counter
• Medical-related transport
• Premiums for long-term care insurance
• Limited to amounts listed in 213(d) 10 of IRS Code
• Premiums for COBRA
• Premiums for individuals over the age of 65
• Retirement health benefits
• Medicare premiums

Health Savings Accounts

Non-Medical HSA Distributions

Under er A Age 6 e 65:

It is possible to withdraw funds, but not advisable. Mus ust pa pay inc ncome t taxes pl plus us 20% pe pena nalty o

• n

n the he no non-medic ical l doll llar amoun unt.

65+ Yea ears Ol Old:

No pe pena nalties f for no non-qua uali lifie ied d di distribu butions ns. . Pay only income taxes

• n those dollar amounts withdrawn

for non-medical items. Health Savings Accounts

Payment Process

Payment t to a Me Medic ical S l Servic ice P Provid ider ( (Doctor, L Lab or Ho Hospit ital, e etc.):

• Provide your insurance card & explain you have an HDHP.
• Most physicians allow you to pay after you receive their bill.
• Match your bill to the EOB (Explanation of Benefits) sent by your insurance.

Paym ymen ent at at t the P e Phar armacy:

• Pharmacies immediately access the rate for prescriptions.
• You can use your HSA debit card to pay for qualified expenses, or pay with

another method and reimburse yourself later.

Paym ymen ent A Arran angem emen ents:

• Medical bills can often be broken down into smaller payments.
• Set up payments directly from your HSA as needed.

Health Savings Accounts

SAVE YOUR RECEIPTS in case of audit!

THANK YOU!