Health Savings Account

How an HSA works
A Health Savings Account (HSA) is an individually owned, tax-favored account that allows individuals to pay for qualified health care expenses. In order to set up or contribute to an HSA, you must be covered by a Qualified High-Deductible Health Plan (HDHP). Premiums associated with an HSA-qualified plan are usually lower than a traditional plan, allowing employees to capture the savings and fund their account. HSA funds can then be used to pay for any qualified out-of-pocket medical, dental or vision expenses for not only the account holder, but also for their legal spouse and any tax dependents.
 

TAX SAVINGS

One of the best benefits of the HSA is that they offer triple tax savings on all of the contributions. This means that any contributions to the HSA can be made either pre-tax or are tax deductible at year-end. Any interest income or earnings on investments tied to your HSA also remain tax free. Lastly, as long as the HSA funds are used to pay for qualified health care expenses then no taxes will be charged on distributions.

 

HSA BENEFITS

  • 100% of unused funds roll over year-after-year
  • Portable- the HSA goes with you even if you switch employers
  • Can pay for the eligible expenses of your legal spouse and tax dependents regardless of their insurance
  • Can be used for Medicare premiums as well as qualified long-term care premiums 

 

HOW HSAs WORK WITH INSURANCE

The primary purpose of your HSA is to help you pay for any eligible out-of-pocket expenses you may incur such as those related to your health insurance deductible. Though your HSA can be used to pay for a number of items not connected to your health insurance, these are some of the most common expenses incurred by individuals. With the enrollment in a HDHP, you will be responsible for paying 100% of your annual Deductible. However, under a HDHP, all out-of pocket-expenses (i.e. prescriptions, doctor visits, MRI, etc.) processed through your health insurance will apply to your deductible. Once your Deductible is met, depending on your health insurance plan, you may be responsible for a percentage of your out-of-pocket expenses (Co-Insurance) up to a set amount called your Out-Of-Pocket maximum. After which your insurance company pays all eligible expenses for the remainder of the year. 

 
Take a look at our HSA guide.

 

INTERESTED IN LEARNING MORE?

Give us a call at 1-855-890-7239 or email sales@nuesynergy.com.

To determine how much cost savings the HSA may provide you and/or your family, you will need to consider several items.

  1. Your Total Contributions (Remember: Contributions as well as accrued interest to the HSA are tax free.)
  2. Your Total Estimated Expenses (Remember: Distributions on qualified medical expenses from the HSA are tax free.)
  3. The Premium Difference Between Your HSA Plan and Other Plan Options (Remember: Monthly premiums for the HDHP insurance are typically lower than those of a Traditional PPO.)

 

YOUR ESTIMATED HSA COST SAVINGS EXAMPLE

  Traditional PPO + FSA HDHP + HSA
Gross Annual Pay $60,000 $60,000
Maximum Annual Health Care FSA Contribution -$2,650 -$6,850
Estimated Annual Family Premium -$13,000 -$11,000
Adjusted Gross Pay = $44,350 = $42,150
Estimated Tax Rate (15%) -$6,653 -$6,323
Estimated Annual Expenses -$2,650 -$2,650
Remaining FSA vs. HSA Balance + $0 + $4,150
Remaining Take Home Pay with FSA vs. HSA = $35,047 = $37,327
     

YOUR TAKE HOME PAY COULD BE $2,280 MORE WITH THE HSA

All figures in this table are estimates and based on an annual salary and maximum contribution limits to the benefit account. Your salary, tax rate, healthcare expenses, and tax savings may be different.

In order to be eligible to enroll and contribute to a Health Savings Account (HSA), you must first ensure you meet the necessary requirements. If your answers to the below questions match ours then you are likely eligible to open and contribute to an HSA.

 

Question Answer
Are you currently enrolled or covered by a HSA-qualified high deductible health plan? YES
Is the annual deductible for your health insurance plan higher than $1,350 for individual coverage or higher than $2,700 for family coverage? YES
Is the annual maximum out-of-pocket for your health insurance plan less than $6,650 for individual coverage or less than $13,300 for family coverage? YES
Are you covered by any other health plan (such as a spouse or parent) that is not considered a HDHP? NO
Are you currently enrolled in Medicare (Part A or Part B) NO
Are you currently enrolled in either a Health Care Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA) that reimburses you for medical expenses in addition to dental and vision expenses? NO
   

 

Self-Only Coverage 2017 2018
Maximum Annual HSA Contribution $3,400 $3,450
HSA Catch-up Contribution (Age 55 or Over) $1,000 $1,000
Minimum Annual Deductible for HDHP $1,300 $1,350
Maximum Out-of-Pocket Limit for HDHP $6,550 $6,650
Family Coverage 2017 2018
Maximum Annual HSA Contribution $6,750 $6,850
HSA Catch-up Contribution  $1,000 $1,000
Minimum Annual Deductible for HDHP $2,600 $2,700
Maximum Annual Out-of-Pocket Limit for HDHP $13,100 $13,300
     

Resources

FAQs

The government does allow a one-time transfer of funds from an IRA to an HSA. However, you can only roll your HSA funds into another HSA not an IRA.

  • The transferred amount, when combined with other HSA contributions for the year, may not exceed your annual maximum contribution.
  • Also, after making such a transfer, you must continue to participate in a qualifying high-deductible health plan for 13 consecutive months, beginning in the month of the IRA-to HSA transfer. If you do not, you will be subject to income taxes and a 20 percent penalty tax on the transferred amount, except in the case of death or disability.
  • Such a transfer may be an option if you incur significant medical expenses and find yourself unable to afford to make the maximum HSA contribution.

Distributions from your HSA used exclusively to pay for qualified medical expenses for you, your spouse, or dependents are excluded from your gross income. Your HSA funds can be used for qualified expenses and will continue to be free from federal taxes and states taxes (for most states) even if you are not currently eligible to make contributions to your HSA.

If you take a non-qualified distribution, you are subject to ordinary income tax and a 20 percent penalty tax. If you are age 65 or older, disabled, or for the year in which you die, the 20 percent penalty may not apply.

There are no tax penalties for closing an HSA. However, if you use HSA funds for other than qualified medical expenses, those distributions will be subject to ordinary income tax, and in some cases, a 20 percent penalty.

Above the line means you will reduce your taxable income regardless of whether you itemize or use the standard deduction on your income tax form. If you contribute to your HSA with after-tax dollars, you may deduct the contribution amount, subject to the maximum annual contribution limits from your taxes at filing time.

When you participate in a payroll deduction program through your employer, deductions can be taken from your payroll before calculating your taxable federal income, FICA (Social Security and Medicare) tax and for most states, taxable state income. By taking deductions pre-tax, you reduce the dollars on which you are taxed and, as a result, reduce your total tax bill.

Blog

News for you: NueSynergy Insights, April 2018

 

 

ICYMI: NueSynergy announces partnership with Employee Navigator

Millennials and the consumer-driven health care market

Millennials and the consumer-driven health care market

Helping a client’s employees get full value from their HSA accounts

Health Savings Accounts (HSAs) are skyrocketing in popularity as premium increases have become the new normal in this uncertain market.

Forms and Guides

To move funds from a Health Savings Account with another administrator and deposit them into your NueSynergy HSA.

To correct a distribution made in error or for an incorrect amount from your Health Savings Account.  

To update your Health Savings Account (HSA) due to a name, phone or address change. Also update, add, or revoke an additonal signer to your HSA.

This form allows you to correct a contribution made in error, contributions made while not being eligible or a contribution over the allowed maximum.

Complete this form if making HSA contributions via check.

Eligible Expenses

To see a complete Eligible Expenses Chart please go to the following link.

See All Eligible Expenses

eClaims Manager

Unlocking the benefit of claims integration for all participants in order to provide a better more convenient user experience.

See More on NueSynergy's eClaims Manager