Health Savings Account (HSA) Defintion

A Health Savings Account (HSA) is a financial tool that allows eligible individuals to set aside money on a pre-tax basis to cover qualified medical expenses. Contributions made to an HSA are not subject to federal income tax, and the funds can be invested and grow tax-free. To be eligible for an HSA, individuals must be enrolled in a high-deductible health insurance plan, meet certain IRS criteria, and not be claimed as a dependent on someone else's tax return.

Health Savings Account (HSA) Strategies

• Employee Education

Provide comprehensive information about HSAs to eligible employees, explaining the benefits and how to set up and contribute to the account.

• Contribution Matching

Consider offering employer contributions or matching funds to encourage employees to contribute to their HSAs.

• Financial Wellness Programs

Incorporate HSAs into broader financial wellness initiatives to help employees understand their benefits and make informed decisions.

• Flexible Benefits Packages

Integrate HSAs into the overall benefits package to offer employees a variety of options to meet their healthcare needs.

• Annual Review

Encourage employees to review their healthcare needs annually and adjust their HSA contributions accordingly.

Health Savings Account (HSA) Examples

• Tax Savings

Contributions made to an HSA are tax-deductible, reducing an individual's taxable income.

• Portability

HSAs are portable, meaning the account belongs to the individual, even if they change employers.

• Investment Opportunities

HSA funds can be invested in mutual funds or other investment vehicles, allowing potential growth.

• Medical Expense Coverage

HSAs cover a wide range of qualified medical expenses, including doctor visits, prescription medications, and medical equipment.

• Roll-Over Feature

HSA funds roll over from year to year, allowing individuals to accumulate savings for future healthcare needs.