Overview
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals with high-deductible health plans (HDHPs) save for medical expenses. expenses are eligible for reimbursement?
Expenses eligible for reimbursement include: co-pays, deductibles, co-insurance, vision care, dental care, and certain medical supplies. The IRS provides specific guidance regarding eligible expenses. (See IRS Publication 502).
Why Should I Participate?
Funds contributed to an HSA are triple-tax-advantaged.
Money goes in tax-free.
Your contribution is deposited into an HSA account prior to taxes being applied to your paycheck, making your savings immediate. You can also contribute to your HSA post-tax and recognize the same tax savings by claiming the deduction when ling your annual taxes.
Money comes out tax-free.
Eligible healthcare purchases can be made tax-free when you use your HSA. Purchases can be made directly from your HSA account, either by using your benefits debit card, ACH, online bill-pay, or check – or, you can pay out-of-pocket and then reimburse yourself from your HSA.
Earn interest, tax-free.
The interest on HSA funds grows on a tax-free basis. And, unlike most savings accounts, interest earned on an HSA is not considered taxable income when the funds are used for eligible medical expenses.
Frequently Asked Questions
Am I eligible?
In order to contribute, you must be enrolled in a qualified high deductible health plan (HDHP). You can not be covered under a secondary health insurance plan, enrolled in Medicare, or listed as another person’s dependent. There are no eligibility requirements to spend previously-contributed HSA funds. A HDHP is a health insurance plan with deductible amounts that are greater than $1,350 for individual or $2,700 for family coverage and have an out-of-pocket maximum that does not exceed $6,750 for individual or $13,500 for family coverage.
How do I contribute money to my HSA?
We’ll send your employer payroll deduction information so that it is automatically deducted and you don’t have to think about it. Your annual contribution will be divided into equal amounts and deducted from your payroll before taxes. Direct contributions can also be made from your personal checking account and can be deducted on your personal income tax return. You will be able to make changes in your contributions by providing the applicable notice of change to your employer.
How much can I contribute to my HSA?
The Healthcare Savings Account (HSA) contribution limits in 2025 have increased to $4,300 for individuals and $8,550 for family coverage. HSA money is yours to keep. Unlike a Flexible Spending Account (FSA), unused money in your HSA isn’t forfeited at the end of the year; it continues to grow, tax-deferred.
When must contributions be made to an HSA for a taxable year?
Contributions for the taxable year can be made in one or more payments at any time after the year has begun and prior to the individual’s deadline (without extensions) for ling the eligible individual’s federal income tax return for that year. For most taxpayers, the deadline is April 15 of the year following the year for which contributions are made.
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.
How do I access the funds in my HSA?
Your HSA is similar to a checking account. You are responsible for ensuring the money is spent on qualified purchases only and maintaining records to withstand IRS scrutiny. Payments can be made via check, ACH, online bill-pay, or debit card, depending on what is available to you. If you withdraw the money for an unqualified expense prior to age 65, you’ll be subject to your ordinary income tax, in addition to 20% tax penalty. You can withdraw the money for any reason without penalty after age 65, but are subject to applicable income taxes. You can transfer money between your HSA cash and HSA investment account at any time.
Can I control how the funds are invested?
Yes. Once your HSA cash account balance reaches the minimum amount required by the custodian, you can transfer funds to an HSA investment account. You can choose from a selection of mutual funds and setup an allocation model for future transfers like you would for a 401k plan.
What happens if my employment is terminated?
HSAs are portable and move with you if you change employment. Your HSA belongs to you, not your employer, just like your personal checking account.
What happens to the money in my HSA if I no longer have HDHP coverage?
Once you discontinue coverage under an HDHP and/ or get secondary health insurance coverage that disqualifies you from an HSA, you can no longer make contributions to your HSA. However, since you own the HSA, you can continue to use the remaining funds for future healthcare expenses.
How does this affect how I do my taxes?
An IRS form 8889 must be completed with your tax return each year to report total deposits and withdrawals from your account. You do not have to itemize to complete this form. You can still deduct healthcare expenses on your tax return, but not the same expenses for which you have already been reimbursed from your HSA.
