Video Spotlight: The Basics of HSAs
March 24, 2017
You’ve probably heard of a Health Savings Account (HSA), but might have questions about how it works. An HSA lets consumers set aside pre-tax dollars to pay for eligible medical, dental and vision expenses, reducing out-of-pocket costs while building financial security for the future. The rules for these accounts and high-deductible health plans (HDHPs) can be complex and may be subject to change, so we’ve broken down the basics in the blog and video below to help you better understand the benefits of HSAs.
1. HSAs must be accompanied by an HDHP
You must have an HDHP if you want to open a health savings account. An HDHP is a health insurance plan that generally doesn't pay for the first several thousand dollars of health care expenses (i.e., your "deductible") but will generally cover you after that.
2. Dollars stay with you
You own and you control the money in your health savings account. Decisions on how to spend the money are made by you. And any HSA funds not used by the end of the year remain in the account.
3. Contribution limits apply
The IRS sets annual contribution limits for HSAs. You can also make catch-up contributions of $1,000 per year after age 55. Wondering what your health savings goal should be? Our HSA savings calculator helps you estimate how much your contributions should be each year, as well as your total projected HSA savings at retirement.
4. HSAs can act as a retirement account
While most people overlook HSAs for retirement savings, they can be a great savings option for employees. HSAs come with more tax advantages than 401(k)s and individual retirement accounts when used to cover medical costs. Money in these accounts grows tax-free and, if used for medical expenses, can also be withdrawn tax-free.
Want to know more about health savings accounts or other employee benefits? Watch the video to learn more about the benefits of an HSA and check out other blogs on our website.
This blog was originally published in March 2017. It was updated for accuracy in March 2018.