A tax-free account that can be used by employees to pay for qualified medical expenses. Contributions do not have to be spent the year they are deposited. Money in the account earns interest and accumulates tax free, so the funds can be used now and in the future. If an employee leaves the job, he or she can take the account with him or her and continue to use it to pay for qualified healthcare expenses. To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance (does not apply to specific injury insurance and accident, disability, dental care, vision care, long-term care), is not eligible for Medicare and can't be claimed as a dependent on someone else's tax return.
An HSA is a tax-advantaged account created for the benefit of an individual covered under a high-deductible health plan. To be eligible, an individual must be covered by a "high-deductible" health plan (as defined by the HSA statute), and not be eligible for other general medical coverage. Contributions to the HSA can be made by the employer, the employee or both. Contributions are deductible if made by the employee, and are excludable from income and wages (for employment tax purposes) if made by an employer. Earnings grow tax-free and distributions for qualified medical expenses (defined under Section 213(d) of the Internal Revenue Code) are tax-free. Unused HSA funds can be carried over from year-to-year, are portable, and can be used into retirement.
These health insurance plans provide incentives for individuals to replace high premium, low-deductible policies with affordable, high deductible catastrophic coverage. Premiums for this coverage are lower and the savings may be used to fund a tax-preferred medical savings account from which you can pay on a pre-tax basis for qualified medical care and expenses, including annual deductibles and co-payments.
A plan that allows workers with high-deductible health insurance coverage to set aside money each year for routine or future health care costs.
Tax-sheltered accounts, set up and funded by eligible individuals, that are earmarked to pay for medical expenses and are designed to be used in conjunction with high-deductible health plans. Account owners are free to spend the money on any type of medical service desired. Whatever amount is not spent each year can be carried forward.
An HSA is a tax-exempt trust or custodial account established for the purpose of paying medical expenses in conjunction with a high-deductible health plan. The HSA cannot stand alone — it can only be combined with a high deductible health insurance plan. A number of the rules that apply to HSAs are similar to rules that apply to individual retirement arrangements (IRAs).
An HSA works like an IRA, except that money is used to pay health care costs. Participants enroll in a relatively inexpensive high deductible insurance plan. Then, a tax-deductible savings account may be opened to cover current and future medical expenses. The money deposited, as well as the earnings, is tax-deferred. The money can then be withdrawn to cover qualified medical expenses tax-free. Unused balances roll over from year to year.
Health Savings Accounts (HSAs) are government approved, tax-deferred accounts that typically target individuals with high deductible health insurance plans. All contributions and distributions are tracked and reported by the Retirement system while the customer determines what the funds are used for. In addition, the customer can make withdrawals via checks or debit card.