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HSAs are savings accounts with IRA-like features, allowing employees to use tax-free funds for medical expenses. Eligibility requires being in a high deductible health plan (HDHP), without other health coverage (with exceptions), not enrolled in Medicare, and not a dependent on someone else’s tax return.
A High Deductible Health Plan (HDHP) is HSA-compatible and is an affordable approach to health care for many employers and their employees. HDHPs have higher deductibles and out-of-pocket expense limits than traditional health plans, but cost less, and give employees more control over their health care costs. Under HDHPs, insured individuals generally pay the expenses for more simple medical procedures, but the plan covers the bulk of higher cost emergency or complex medical procedures. An HDHP is HSA-compatible if it satisfies the annual deductible and out-of-pocket expense requirements.
HSA owners have complete ownership and control of their HSAs and can take their money out at any time. HSA distributions are only tax-free, however, when used to pay qualified medical expenses for the HSA owner, a spouse and any dependents, as permitted under federal tax law. If not needed for medical expenses, the HSA assets can be saved for retirement. Otherwise, HSA distributions not used for qualified expenses can be subject to income tax and IRA tax penalties.
HSA/HDHPs are not for everyone, but with the rising cost of health care and health insurance, they are becoming a viable solution for more and more people. Consult with an attorney or a competent business advisor to determine if the HSA/HDHP alternative is right for your business.
HSAs at NuMark Credit Union
There are no fees to open an HSA at NuMark Credit Union and they come with a Visa Debit Card for your convenience.
