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HSAs: Three Ways to Win
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Major Benefits of an HSA
A tax-advantaged way to manage your healthcare costs
Increased choice over who you pay & how you pay for your services
A tax efficient tool for retirement savings
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HSAs: The Brilliant Basics
You own the account - account is ‘portable’
No ‘use it or lose it’ provision
Employees can choose their healthcare
professionals (including out-of-network)
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The Brilliant Basics - continued
Save with lower health insurance premiums
Employees can manage their medical expenses
more efficiently
Plan ahead & save for large medical expenses
No time limit to reimburse yourself for eligible
expenses
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Tax-Advantaged Savings Vehicle
Pre-tax
Post-tax cash contributions
HSA Contributions can come
from both the employer and
employee/individual
Tax-free interest or
investment earnings
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More Tax Advantages
Tax-free distributions
Contributions can be made until April
15 of following year (for prior plan
year)
Additional ‘catch-up’ contributions can
be made by individuals aged 55 or
older (until they enroll in Medicare)
No income limits to contribute
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Benefits for Participants with High Healthcare Expenses
Optimize your HSA account benefits with pre-tax contributions.
Plan ahead when you anticipate a large expense such as, surgical procedures or expensive medicines
Enjoy HSA tax-free earnings and withdrawals, and reimburse yourself at any time
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Benefits for Medium HSA Users
Manage your medical costs more efficiently (use HSA debit card for co-pays, prescriptions; maximize deductible at year-end)
Plan ahead for large medical expenses in future years with pre-tax contributions and enjoy tax-free earnings
Can make prior year contributions until April 15 of following year & reimburse at any time
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Advantages for Occasional HSA Account Users
Enjoy tax-free earnings on the portion of your account that you don’t currently need
Ability to plan ahead & save for future healthcare expenses with pre-tax contributions
Take your account with you when you retire or change employers
No time limit to reimburse yourself from HSA, even in retirement or if unemployed
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Allowable HSA Expenditures
Doctor’s office visits (deductibles/coinsurance) Lab fees Prescription drugs (incl. prescribed vitamins) Acupuncture; Chiropractic services Dental care, including braces Hearing aids Prescription eyeglasses; LASIK surgery Smoking Cessation & Weight loss programs
See complete list in IRS Publication 502
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Basics of Cash Flow Benefit
Pay yourself first
Make ‘catch-up’ contribution if 55 or older
Plan ahead for large expenses
Can ‘back-load’
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Managing Cash Flow Impact
Unused contributions can be invested and accumulate tax-free (like an IRA)
If cash flow is tight, estimate the amount of out-of-pocket costs that need to be covered and contribute accordingly
If you underestimate your expenses, you have until April 15 of the following year to fund H A S
Can reimburse eligible expenses at any time
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Nuts and Bolts of HSA Savings
Bring HSA debit/credit card to doctor appointments (pay co-pays) & when filling prescriptions
Keep track of receipts, distributions & record qualified expenses on a worksheet
Maximize deductible Make doctor & dentist appointments
(especially out-of-network) Fill prescriptions Make eligible purchases