With an HSA, any earnings on the employee’s contributions are tax advantaged. Meaning, earnings on your HSA dollars are not subject to taxation. The HSA account is funded by pre-tax contributions by the employee. Employers and other third parties also can contribute to the account. The employee determines the amount of money that is withheld each paycheck before payroll taxes are deducted. This gives employees more take-home pay, while you, their employer, pay less in FICA and FUTA payroll taxes.
Like a flexible spending account (FSA) funds in the HSA can be used to cover qualified medical expenses – from co-payments, to pharmacy bills, dental care, vision care and more. Unlike an FSA though, the employee’s HSA balance rolls over from year to year, so there is no loss savings. Employees can also take the balance with them even if they change plans, retire or leave your organization.
Employers may want to offer an HSA because of its investment potential. Participants can use the money in their HSA to invest in mutual funds, stocks or other investment tools. An HSA is also beneficial for retirees, since participants can use HSA funds on non-qualifying expenses after age 65. However, you can no longer contribute to an HSA once you are over age 65 and enrolled in Medicare.
The more you contribute to an HSA, the more you’ll save. Contribution limits do change and they also very between individual and family coverage. Then for participants 55 or older, they can contribute an extra $1,000 a year, often referred to as a catch-up contribution. You can see all the contribution limits here.
With an HSA through isolved, all users have access to secure online portals 24/7/365 and convenient debit cards to pay for qualified expenses at the time of service. You and your employees also get access to Human Resources staff to answer claims and account questions.
isolved’s health FSA, HRA, HSA, dependent care FSA, and transportation accounts are fully integrated in one platform, creating a single online portal or mobile phone app experience for the user.
If you’d like to learn more about isolved’s HSA administration, click here.