Health Savings Accounts

What is an HSA?

A Health Savings Account (HSA) is a medical savings account available to individuals who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit, and unlike a Flexible Spending Account, funds accumulate if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement, but similar to an individual retirement arrangement (IRA); also similar to the IRA, HSA funds can be invested and controlled by the individual.

HSAs will help to reduce employer healthcare expenses by allowing them to offer better benefit packages to their employees and provide their employees with flexibility, choice and tax advantages. The HSA provides attractive incentives for employers of all sizes and individual consumers to provide health insurance while putting healthcare decisions back in the hands of the consumers.

Who contributes to an HSA?

Individuals or employers may contribute to the HSA on a pre-tax basis; if the employer contributes to the account, all employees must be treated equally. The main advantage of making pre-tax contributions is the FICA savings which amounts to 7.65% to both the employer and employee. Regardless of the tax savings associated with the deposit, the deposits may only be made for individuals covered under the high deductible HSA-eligible health plan. Deposits may be made through payroll reductions, wire transfers, and standard check deposits.

If you have individual healthcare coverage, the maximum annual contribution that you can make to an HSA is $3,300 for 2014. If you have family healthcare coverage, the maximum annual contribution is $6,550 for 2014.

What and how can I spend my HSA funds?

HSA funds are designed to be used to pay for qualified medical expenses at any time without federal tax liability. There are no transaction fees associated with the alt Bentley Yates and All American Benefits sponsored HSA account; all withdrawals are free of charge. Withdrawals for non-medical expenses are treated very similarly to those in an IRA account in that they may provide tax advantages if taken after retirement age but will incur penalties if taken earlier.

With the alt Bentley Yates and All American Benefits HSA, participants will receive a Benny™ Prepaid Benefits Card as well as a check book to make qualified medical payments; online bill pay is also available.

Features and Benefits of an HSA

Employers and employees will benefit from alt Bentley Yates and All American Benefits' HSA solution in the following ways:

  • Tax-advantaged - Contributions are tax free, potential interest gains accumulate tax free and distributions are tax free when used to pay for qualified medical expenses.
  • Flexible - Funds can be used for non-medical expenses. At age 65, any remaining HSA funds can be withdrawn for non-medical reasons without penalty; ordinary income tax will be charged on the money withdrawn for non-medical reasons.
  • Portable - The remaining balance rolls over from year to year; accounts move with employees even if they change employment or retire.
  • A savings solution for future health needs - Unused contributions accumulate and can be saved and used for future medical expenses. For example, unused funds can be used to pay COBRA or other medical insurance premiums during periods of unemployment or temporary layoff.
  • Multi-account coordination - The Benny™ Prepaid Benefits Card and the mySourceCard® has the ability to coordinate fully with other healthcare product lines like FSAs and HRAs, enabling multiple accounts to be accessed on the same card in compliance with IRS guidelines. Traditional bank HSA debit cards cannot support multiple products.