FAQs

Frequently Asked Questions

HSAs

    • What is a Health Savings Account (HSA)?
    • A Health Savings Account (HSA) is a special tax-advantaged savings account similar to a traditional Individual Retirement Account (IRA) but designated for medical expenses. An HSA allows you to pay for current eligible health care expenses and save for future qualified medical and retiree health care expenses on a tax-favored basis.

      HSAs provide triple-tax advantages: contributions, investment earnings, and qualified distributions all are exempt from federal income tax, FICA (Social Security and Medicare) tax and state income taxes (for most states).

      Unused HSA dollars roll over from year to year, making HSAs a convenient and easy way to save and invest for future medical expenses. You own your HSA at all times and can take it with you when you change medical plans, change jobs or retire.

      Funds in the account not needed for near-term expenses may be able to be invested, providing the opportunity for funds to grow. Investment options include money market accounts, mutual funds, etc. Check with your financial institution to understand your options.

      To be eligible to set up an HSA and to make contributions, you must be covered by a qualified “high-deductible health plan”, or HDHP.

    • How does an HSA work?
    • Basic Overview:

      1. To be eligible to contribute to an HSA, you must be covered by a qualified high-deductible health plan (HDHP) and have no other first dollar coverage (insurance that provides payment for the full loss up to the insured amount with no deductibles).
      2. You may use your HSA to help pay for medical expenses covered under a high-deductible health plan, as well as for other common qualified medical expenses.
      3. Unused HSA funds remain in your account for later, and may be able to be invested in a choice of investment options, providing the opportunity for funds to grow. Check with you financial institution to see if this is an option for your account.

      HSAs work in conjunction with an HDHP. All the money you (or your employer) deposit into your HSA, up to the maximum annual contribution limit, is 100% tax-deductible from federal income tax, FICA (Social Security and Medicare) tax, and in most states, state income tax. This makes HSA dollars tax-free.

      You can use these tax-free dollars to pay for expenses not covered under your HDHP until you have met your deductible.

      The insurance company pays covered medical expenses above your deductible, except for any coinsurance; you can pay coinsurance costs with tax-free money from your HSA. In addition, you can use your HSA tax-free dollars to pay for qualified medical expenses not covered by the HDHP, such as dental, vision and alternative medicines.

      If the funds in your account are used for other, nonmedical expenses, your dollars are subject to ordinary tax, plus a 20% penalty if you are under age 65.

      The 20% penalty does not apply if the distribution occurs after you reach age 65, become disabled or die; however, ordinary income tax may still apply. Funds remaining in your account at year-end are yours to rollover and accumulate for your future healthcare expenses. You may choose not to spend your HSA dollars on small expenses, instead using after-tax dollars to pay for these expenses, and leaving your HSA dollars to grow for future needs.

      Choosing the expenses on which to spend your HSA dollars and which to pay out-of-pocket with after-tax dollars is entirely up to you.

    • Who is eligible to open an HSA?
    • If you meet all the criteria listed below, you are eligible to open and contribute to an HSA. The Medicare Act of 2003, which established HSAs, defines "eligible individuals" as those who:

      1. Are covered by a qualified high-deductible health plan (HDHP)
      2. Are not covered by another health care plan, such as a health plan sponsored by a spouse’s employer, Medicare or TriCare
      3. Cannot be claimed as a dependent on another individual's tax return

      You may still open and contribute to an HSA if you have certain limited coverage approved by the IRS, such as dental, vision and long-term care insurance. And you are still eligible to establish an HSA if you are entitled to benefits under an Employee Assistance Plan (EAP), disease management or wellness program or have a discount card for prescriptions.

    • Who is eligible to contribute to an HSA?
    • After you open your HSA, making contributions helps you build a balance to assist with current and future health care expenses. Anyone, including your employer or family members, may contribute to your HSA. You can make contributions by payroll deduction (if available) or by after-tax contributions.

      Payroll deductions: If your employer offers the option, you may specify a regular contribution to be deducted from your paycheck. This contribution will be made before Social Security, federal, and most state income taxes are deducted.

      After-tax contributions: You may choose to make all or part of your annual account contributions to your HSA by making “after-tax” contributions to your account. These contributions may be deducted on your income tax return, using IRS Form 1040 and Form 8889.

      Employers may make contributions to your account as well; while you do not take a deduction for these contributions, they are excluded from your gross income.

      Note: You will use IRS Form 1040 for your HSA contributions, not the short form 1040A or 1040EZ. This deduction is taken “above the line”: you do not need to itemize contributions on Schedule A in order to claim the deduction for HSA contributions.

      You are eligible to make contributions to your HSA as long as you meet the definition of an “eligible individual” as listed in the question, “Who is eligible to open an HSA?”

      If you no longer participate in a high-deductible health plan or enroll in Medicare, you can no longer contribute new funds to your HSA account.

    • How is money deposited into an HSA?
    • Money may be deposited into your HSA through payroll deduction, if your employer participates in such a program, or you may make deposits directly to your account. Deposits may be made periodically or in a lump sum, but only up to the contribution limits set by the IRS.

      Payroll deductions: If your employer offers the option, you may specify a regular contribution to be deducted from your paycheck. This contribution will be made before Social Security, federal, and most state income taxes are deducted.

      After-tax contributions: You may choose to make all or part of your annual account contributions to your HSA by making “after-tax” contributions to your account. These contributions, which you can make by writing a personal check, may be deducted on your income tax return, using IRS Form 1040 and Form 8889.

      Employers may make contributions to your account as well; while you do not take a deduction for these contributions, they are excluded from your gross income.

      Note: You will use IRS Form 1040 for your HSA contributions, not the short form 1040A or 1040EZ. This deduction is taken “above the line”: you do not need to itemize contributions on Schedule A in order to claim the deduction for HSA contributions.

    • What is the value of an HSA?
    • First, consider the following: unless you have a significant, catastrophic-type medical claim, it is unlikely that you will recoup the amount of money you pay in employee contributions for traditional plans (such as a PPO) or even Health Reimbursement Accounts (HRAs).

      For example, assume you contribute $550 a month for family coverage, which amounts to $6,600 per year (12 x $550). We’ll come back to this figure.

      Now, if your family has three doctor visits during the year at $200 each ($600 total), plus four prescriptions at an average of $75 ($300 total), that's a total of covered expenses for the year of $900. Assuming the co-payments for each of the three doctor visits was $20 (3 x $20 = $60) and each of the four prescriptions was $30 (4 x $30 = $120), you will pay $180 out of pocket, taxed.

      Now let’s look at the whole picture. Your insurance paid for $720 of your $900 in costs. You paid $180 — taxed — along with $6,600 in contributions.

      Compare the numbers of your available plans. The HDHP usually offers lower premiums in exchange for the higher deductible, including the same coverage for significant health expenses as with the more expensive traditional plans. You pay for costs below the deductible with tax-free dollars and employer contributions, if offered, and keep and grow the funds you don’t use each year.

    • Why establish an HSA? What are the advantages?
    • Yes, you can have both an HSA and an IRA.

      Tax-advantaged:

      1. Contributions you make through payroll deposits are made with pre-tax dollars, meaning they are not subject to federal (or state, for most states) income taxes.
      2. Contributions to your HSA made with after-tax dollars can be deducted from your gross income, meaning you pay less income tax at the end of the year.
      3. The interest you earn on your HSA balance is not taxed.
      4. Withdrawals from your HSA for qualified medical expenses are not subject to federal income tax. As long as you use your HSA funds for qualified medical expenses, you will not have to pay federal (or state, for most states) income taxes.
      5. Employers may make contributions to your account; these contributions are excluded from your gross income.

      Flexible: The money is yours; it grows and remains with you, even when you change medical plans, change employers or retire. There are no "use it or lose it" rules. Even if you are no longer eligible to make contributions, funds in your account may still be used to pay for qualified medical expenses tax-free. And after age 65, or in cases of disability, the funds in the account can be used for nonqualified expenses.

      Portable: Accounts move with you when you change medical plans, change employers or retire.

      Savings mechanism for future health needs: Unused funds can grow through interest and investment earnings and can be "banked" for future medical expenses.

      Contributions can come from multiple sources: As long as you are covered by a qualified HDHP, you, your employer, family members, or anyone else may contribute to your HSA up to the maximum annual contribution limit.

    • What is a high-deductible health plan (HDHP)?
    • With a high-deductible health plan, you have the security of comprehensive health care coverage. Like a traditional plan, you are responsible for paying for your qualified medical expenses up to the in-network deductible; however, the deductible will be higher, and you can use HSA funds to pay for these expenses.

      After the annual deductible is met, you are responsible only for a portion of your medical expenses through coinsurance or co-payments, just as with a traditional health plan. For 2017, the minimum HDHP deductible by law is $1,300 for individuals and $2,600 for families.

      For 2017, the maximum out-of-pocket expenses by law (including deductible and co-payments, but not including premiums) cannot exceed $6,550 for individuals and $13,100 for families.

      The deductible and maximum out-of-pocket expenses are indexed annually for inflation by the IRS and US Department of Treasury.

    • How do I know if my health plan is a "qualifying (or qualified)” high-deductible health plan (HDHP)?
    • The health insurer or your employer can verify the status of your coverage. In addition, the words "qualifying (or qualified) high-deductible health plan" or a reference to IRC (Internal Revenue Code) Section 223 will be included in the declaration page of your policy or in another official communication from the insurance company.

      To be a qualified plan, the deductible cannot be below the annually declared minimum and out-of-pocket maximums cannot exceed the maximum as outlined below:

      1. The minimum annual deductible cannot be less than $1,300 for individual coverage or $2,600 for family coverage in 2017
      2. A deductible greater than the minimum is permitted in a qualified plan, but the maximum contribution cannot be more than $3,400 for individual coverage OR $6,750 for family coverage in 2017
      3. The maximum out-of-pocket expenses are capped at $6,550 for individual coverage and $13,100 for family coverage in 2017
      4. Deductibles and out-of-pocket maximums are adjusted annually for inflation by the IRS and US Department of Treasury

      A qualified HDHP with family coverage may have deductibles for both the family as a whole (an umbrella deductible) and for individual family members (embedded deductibles). If either the deductible for the family (umbrella) or the deductible for an individual (embedded) is below the minimum annual deductible for family coverage ($2,600) for 2017, the plan is not a qualified HDHP.

    • How do HSAs differ from health care flexible spending accounts (FSAs)?
    • Both HSAs and FSAs allow you to pay for qualified medical expenses with pre-tax dollars. One key difference, however, is that HSA balances can roll over from year to year, while FSA money left unspent at the end of the year or after a designated grace period is forfeited. You may choose to use a Limited Purpose FSA to pay for eligible heath care expenses and save your HSA dollars for future health care needs. You may use Limited Purpose FSA dollars to reimburse yourself for expenses not covered by your high-deductible health plan, such as:

      1. Vision expenses, including: Glasses, frames, contacts, prescription sunglasses, goggles, vision co-payments, optometrists or ophthalmologist fees, and corrective eye surgery
      2. Dental expenses, including: Dental care, deductibles and co-payments, braces, x-rays, fillings, and dentures

    • How is an HSA different from a savings account?
    • The funds in a regular savings account do not have the tax advantages of an HSA. Also, funds from an HSA can only be used for qualified medical expenses.

    • Can my spouse and I have a joint HSA, like our regular checking account?
    • No, only one person can be named the account owner. If both you and your spouse have qualified HDHP coverage, you must each have your own account.

      If both you and your spouse have family coverage under qualified high-deductible health plans, the maximum total tax-deductible HSA contribution both of you can make (including employer contributions) is the IRS limit for family coverage. In 2014, that amount is $6,350. This contribution can be divided between you and your spouse however you wish. If you and/or your spouse are eligible to make catch-up contributions, you may each contribute your eligible catch-up contribution to your individual HSA.

    • Why is my employer offering an HSA in conjunction with a qualified HDHP?
    • Offering an HSA is an excellent way to help you save for future medical expenses and pay for current expenses with tremendous tax advantages.

    • May I have more than one HSA?
    • Yes, you may have more than one HSA and you may contribute to them all, as long as you are currently enrolled in an HDHP. However, this does not give you any additional tax advantages, as the total contributions to your accounts cannot exceed the annual maximum contribution limit. Contributions from your employer, family members, or any other person must be included in the total.

    • May employees continue to use the HSA if they no longer have a QHDHP?
    • Yes, they may use funds in the HSA; however, they may no longer contribute to it.

    • Is the HSA a COBRA qualifying benefit?
    • No, but the QHDHP may be subject to COBRA.

Eligibility & Enrollment

  • Can I have an HSA in addition to an IRA or other qualified retirement plan?
  • Yes, you can have both an HSA and an IRA.

    Although HSAs operate under many of the same rules that apply to traditional IRAs, an HSA is not an IRA; it is a tax-advantaged savings account for current and future medical expenses. (However, it may be used to pay for nonmedical expenses without penalty after the accountholder turns 65, so it can be used to save for retirement.)

  • My spouse's employer provides low-deductible family coverage at no cost. I am covered under my spouse's plan. If I enroll in my employer's qualified HDHP, am I eligible for an HSA?
  • No. Even though you are covered by an HDHP, since you are also covered by a low-deductible plan too, you are not eligible for an HSA. Individuals covered by an HDHP only can contribute to an HSA.

  • How do Veteran’s Administration (VA) health benefits affect the HSA?
  • If the employee has received VA health benefits in the past three months, he/she may not have an HSA.

  • May we set up an HSA for a minor dependent?
  • No. A dependent may not participate in an HSA.

Contributions

  • Can I contribute stock to my HSA?
  • No. Only cash may be contributed to your HSA. You may be able to set up an HSA investment account with investment options, such as mutual funds or securities, which you may purchase with your HSA funds. Check with your financial institution to determine if this is an option.

  • Does how much I contribute to my IRA limit how much I can contribute to my HSA?
  • No. Your contributions to your HSA are limited to a maximum annual contribution adjusted each year by the IRS. Your contributions to an IRA have no bearing on your HSA and vice versa.

Distributions

  • Can I pay out-of-pocket eligible expenses with after-tax dollars instead of using my HSA funds?
  • Yes. You always have the option to choose when and when not to use your HSA dollars. You may pay for qualified medical expenses with after-tax dollars, allowing your HSA balance to grow tax-free.

    Many HSA participants elect to pay smaller expenses with after-tax dollars, allowing their balances to grow for the future.

  • What health care expenses does my HSA cover?
  • Your HSA funds can be used tax-free to pay for out-of-pocket qualified medical expenses, even if the expenses are not covered by your HDHP. This includes expenses incurred by your family.

    There are hundreds of qualified medical expenses, including many you might not expect: doctor prescribed over-the-counter medications; dental visits; orthodontics; glasses; long-term care insurance premiums; cost of COBRA coverage; medical insurance premiums while receiving federal or state unemployment compensation and post age-65 premiums for coverage other than Medigap or Medicare supplemental plans.

    In addition, HSA funds may be used to pay your Medicare Parts A and B premiums and for employer-sponsored retiree plans.

    All of these expenses may be paid for with your HSA funds, free from federal taxes or state tax (for most states). Refer to IRS Publication 502 for a more complete list of qualified medical expenses.

Manage Your HSA

  • What happens to my HSA if I become disabled?
  • If you become disabled and enroll in Medicare, contributions to your HSA must stop as of the first of the month in which you become enrolled. You may use your HSA funds to pay Medicare Part A and/or B premiums. Payment of these Medicare premiums is a qualified expense and a tax free distribution. Distributions from your HSA used for non-qualified expenses will be subject to ordinary income tax but exempt from the 20 percent penalty.

  • What happens to my HSA if I quit my job or otherwise leave my employer?
  • Your HSA is portable. This means that you can take your HSA with you when you leave and continue to use the funds you have accumulated. Funds left in your account continue to grow tax-free. If you are covered by a qualified HDHP you can even continue to make tax-free contributions to your HSA.

    Distributions from your HSA used exclusively to pay for qualified expenses for you, your spouse, or dependents are excluded from your gross income. Your HSA funds can be used for qualified expenses even if you are not currently eligible to make contributions to your HSA.

No Longer a Member

  • I no longer participate in a qualified HDHP. Can I still receive tax-free distributions to reimburse my qualified expenses or those of my family?
  • Yes. Participation in a qualified HDHP is not required to receive distributions. In order to maintain the tax-free status of the distribution, funds must be used for qualified medical expenses.

  • How are distributions from my HSA taxed after I am no longer eligible to contribute?
  • If you are no longer eligible to contribute because you are enrolled in Medicare benefits, or are no longer covered by a qualified HDHP, distributions used exclusively to pay for qualified medical expenses continue to be free from federal taxes and state tax (for most states) and excluded from your gross income.

Reaching Age 65

  • What happens to the money in my HSA after I reach age 65?
  • At age 65 and older, your funds continue to be available without federal taxes or state tax (for most states) for qualified medical expenses. For instance, you may use your HSA to pay certain insurance premiums, such as Medicare Parts A and B, Medicare HMO, or your share of retiree medical coverage offered by a former employer. Funds cannot be used tax-free to purchase Medigap or Medicare supplemental policies.

    If you use your funds for qualified medical expenses, the distributions from your account remain tax-free. If you use the monies for non-qualified expenses, the distribution becomes taxable, but exempt from the 20 percent penalty. With enrollment in Medicare, you are no longer eligible to contribute to your HSA. If you reach age 65 or become disabled, you may still contribute to your HSA if you have not enrolled in Medicare.

  • If I, as an employee, have Medicare or Medicaid, may I also have an HSA?
  • No. Anyone currently enrolled in Medicare or Medicaid isn’t eligible to open an HSA.

Death

  • What happens to my HSA when I die?
  • Your HSA is an inheritable account. What happens to your HSA when you die depends who you named as your beneficiary.

    Spouse designated beneficiary. If your spouse is your designated beneficiary, the account will be treated as your spouse's HSA after your death. The account will continue to be tax-free for qualified medical distributions. If your spouse is covered by a qualified HDHP, contributions to the account may also be made tax-free, up to maximum annual contribution limits.

    Other than spouse designated beneficiary. If you designate someone other than your spouse as the beneficiary of your HSA:

    1. The account stops being an HSA on the date of your death
    2. The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die (without penalties)
    3. The amount taxable to a beneficiary (other than your estate) is reduced by any qualified medical expenses you incurred prior to your death that are paid from the HSA by the beneficiary within one year after the date of death

    Your estate is the beneficiary. If your estate is the beneficiary of your HSA, the value of your account is included on your final income tax return.

    NO designated beneficiary on file. If you do not have a beneficiary on file, the funds are payable to the account holder's estate.

Tax Considerations

  • How is my HSA taxed?
  • Contributions, investment earnings, and distributions for qualified medical expenses all are exempt from federal income tax, FICA (Social Security and Medicare) tax and state income taxes (for most states). or penalty.

  • What does pre-tax mean?
  • When you participate in a payroll deduction program through your employer, deductions can be taken from your payroll before calculating your taxable federal income, FICA (Social Security and Medicare) tax and for most states, taxable state income. By taking deductions pre-tax, you reduce the dollars on which you are taxed and, as a result, reduce your total tax bill.

  • What is an "above the line" tax deduction?
  • Above the line means you will reduce your taxable income regardless of whether you itemize or use the standard deduction on your income tax form. If you contribute to your HSA with after-tax dollars, you may deduct the contribution amount, subject to the maximum annual contribution limits from your taxes at filing time.

  • Is there a limit on how much I may contribute to my HSA and deduct from my taxes each year?
  • For 2014, the combined maximum contributions to your HSA, including any made by your employer to your account, are $3,300 if you have individual coverage and $6,350 if you have family coverage. If you turn age 55 or older in 2014, you may add up to $1,000 more as a “catch up” contribution.

    These amounts are valid as long as you enroll in qualified HDHP coverage before the first day of December, meaning you have held at least one full month of HDHP coverage, and so long as you continue to maintain qualified HDHP coverage for the next 12 months. Otherwise, you may be eligible to contribute a prorated amount to your HSA account.

    The IRS determines these maximum contribution limits annually.

  • If I close my HSA, are there any tax penalties?
  • There are no tax penalties for closing an HSA. However, if you use HSA funds for other than qualified medical expenses, those distributions will be subject to ordinary income tax, and in some cases, a 20 percent penalty.

  • When will the 20 percent penalty be assessed for a distribution for non-qualified expenses?
  • The 20% penalty will be assessed for the year in which you take the distribution for non-qualified expenses. The penalty will be due and payable when you file your annual tax return.

  • How are distributions from my HSA taxed?
  • Distributions from your HSA used exclusively to pay for qualified medical expenses for you, your spouse, or dependents are excluded from your gross income. Your HSA funds can be used for qualified expenses and will continue to be free from federal taxes and states taxes (for most states) even if you are not currently eligible to make contributions to your HSA.

    If you take a non-qualified distribution, you are subject to ordinary income tax and a 20 percent penalty tax. If you are age 65 or older, disabled, or for the year in which you die, the 20 percent penalty may not apply.

  • How are distributions from my HSA taxed after I am no longer eligible to contribute?
  • If you are no longer eligible to contribute because you are enrolled in Medicare benefits, or are no longer covered by a qualified HDHP, distributions used exclusively to pay for qualified medical expenses continue to be free from federal taxes and state taxes (for most states) and excluded from your gross income.

  • What tax forms will I receive to include with my annual tax filings?
  • Form 1099-SA notifies the IRS of distributions made from your HSA during the tax year. Form 5498-SA notifies the IRS of contributions made to your HSA during the tax year. The institution holding your account will send the appropriate year-end form(s) to you with instructions regarding the forms' use and requirements for filing your annual tax return.

  • What about taxes on the money in my HSA not used for medical expenses?
  • All the dollars in your HSA, including earnings generated on those dollars, are completely free of federal taxes and state taxes (for most states) while in your account.

    The only time tax is ever owed on principal or interest from your HSA is if the money is distributed for nonqualified expenses prior to your reaching age 65, becoming disabled or dying. Even if you use the funds for nonqualified expenses after you are 65 or disabled, you will only be subject to tax on the money you withdraw without the 20 percent penalty. You can always withdraw funds to pay for qualified medical expenses at any time without tax or penalty.

  • What is the tax treatment of contributions made by a family member or anyone else to my HSA?
  • If a family member or anyone else makes a contribution to your HSA, the tax advantages apply to you and not the person making the contribution. You may deduct the contribution amount when filing your annual income taxes, in the same way you would if you had deposited the post-tax contribution on your own. All contributions to the account are combined and subject to maximum annual contribution limits.

Rollovers / Transfers, FSAs, and HRAs

  • Can I roll over or transfer funds from my HSA or Medical Savings Account (or Archer MSA) into an HSA?
  • Yes. Pre-existing HSA funds or MSA monies may be rolled into an HSA and will continue their tax-free status.

  • Can I roll over or transfer funds from my HSA to my IRA?
  • No. You can only roll your HSA funds into another HSA. However, the government does allow a one-time transfer of funds from an IRA to an HSA. The transferred amount, when combined with other HSA contributions for the year, may not exceed your annual maximum contribution.

    Also, after making such a transfer, you must continue to participate in a qualifying high-deductible health plan for 13 consecutive months, beginning in the month of the IRA-to HSA transfer. If you do not, you will be subject to income taxes and a 20 percent penalty tax on the transferred amount, except in the case of death or disability.

    Such a transfer may be an option if you incur significant medical expenses and find yourself unable to afford to make the maximum HSA contribution.

  • Can I roll over or transfer funds from my IRA to my HSA?
  • Yes. The government does allow a one-time transfer of funds from an IRA to an HSA. The transferred amount, when combined with other HSA contributions for the year, may not exceed your annual maximum contribution.

    Also, after making such a transfer, you must continue to participate in a qualifying high-deductible health plan for 13 consecutive months, beginning in the month of the IRA-to- HSA transfer. If you do not, you will be subject to income taxes and a 20 percent penalty tax on the transferred amount, except in the case of death or disability.

    Such a transfer may be an option if you incur significant medical expenses and find yourself unable to afford to make the maximum HSA contribution.

  • What are Medical Savings Accounts [MSAs], Health Reimbursement Accounts or Health Reimbursement Arrangements [HRAs], and Flexible Spending Accounts [FSAs]?
    1. Medical Savings Accounts (MSAs) were established before HSAs and are also known as Archer MSAs. They were made available in 1996 to self-employed individuals and employees of smaller businesses. If you have an MSA, you may transfer your funds to your HSA. You may choose to keep both an MSA and an HSA.

      If you contribute to your MSA, your HSA maximum annual contribution limit will be reduced by the amount of contributions to your MSA each year. At age 65, you may spend your MSA or HSA monies on whatever you choose, penalty free, but you will have to pay tax on non-qualified distributions.

    2. Health Reimbursement Accounts or Health Reimbursement Arrangements (HRAs) are wholly employer-owned accounts and are generally administered by the employer on a "pay-as-you-go" basis. Bookkeeping entries or accounts are established and maintained by employers on behalf of each covered employee for the purpose of paying for unreimbursed medical expenses. Often employers will allow you to roll over the money remaining in your HRA at the end of the year to your HRA for the next year.

      However, if you leave your employer, your account generally cannot be taken with you and you may not have future access to the remaining balance. With the Tax Relief and Health Care Act of 2006, employers may transfer HRA balances to open HSAs. Individuals may not execute a transfer on their own.

    3. Flexible Spending Accounts (FSAs) are usually funded by you through voluntary pre-tax payroll deductions. No federal income tax, FICA (Social Security and Medicare) tax and in most states, state income tax deductions, are taken from these contributions. FSAs are established to pay for specific health care expenses that are not reimbursed by a group health plan such as eyeglasses, dental work, deductibles and co-payments. Your expenses and the expenses of your spouse, dependent children, and any other qualified tax dependent can be paid for using your flexible spending account.

      Employers may offer FSAs as part of a cafeteria plan and have complete flexibility to offer various combinations of benefits in designing their plan. Based on previous IRS regulations, contributions remaining at the end of the plan year were forfeited under the IRS "use it or lose it" rule.

      Even though the IRS has extended the allowable period to beyond the end of the plan year, the "use it or lose it" rule remains an integral component of any FSA. Employers must amend their plans to include the time extension beyond the end of the plan year now permitted by the IRS. The extension is not automatic. At the end of the extension period, unused funds are still forfeited.

      Some employers may even contribute to the FSA, but this is not an IRS requirement. So that requests for reimbursement can be paid, employers must receive verification of the medical claims. You do not have to be covered under the employer/sponsor's health care plan, or any other health care plan to participate in an FSA.

      Self-employed persons are not eligible for an FSA. Caution: Health care FSAs also are referred to as "tax free spending accounts," "medical reimbursement accounts (MRAs)," and even "health care spending accounts (HCSAs or HSAs)". Don't be confused by the inconsistent terminology.

  • What is the difference between health care flexible spending accounts (FSAs) and HSAs?
  • Both HSAs and FSAs allow you to pay for qualified medical expenses with pre-tax dollars. One key difference, however, is that HSA balances can roll over from year to year, while FSA money left unspent at the end of the year is forfeited. If you have both an HSA and an FSA, you must pay certain expenses, such as those that apply to the HDHP deductible, out of your HSA before you may use your limited-purpose FSA.

  • Can I have an HSA and an HRA and/or FSA?
  • Yes, provided that the HRA and/or FSA do not pay first dollar for any benefit that is covered by the HDHP. In addition, there are specific rules for how these may be combined; talk with your employer or check the IRS website for full information.

  • Can employees stop/change FSA contributions if they become eligible for an HSA?
  • No. Employees must have a qualifying status change to stop or change FSA contributions.

Mobile Banking

  • How do I get the Avidia Health HSA mobile app?
  • Go to your Android or Apple mobile app store. Search for “Avidia HSA” and click the download on the app. Register your account and you’re done!

  • What can I do in the mobile application?
  • You can view & update your profile information.

    1. View your account details: Balances, contributions, transactions, investments and make bill payments.
    2. Card Info: View your PIN or Mark card as Lost/Stolen
    3. Claims: If you have linked your insurance carrier to your HSA (eClaims Manager), you can view them here.
    4. Alerts: You can see any alerts from Avidia Bank.