Health Savings Accounts
An HSA is a tax-free savings account that you can use to save money and pay for qualified health care expenses with tax-free dollars. Plus, unused funds roll over from year to year and continue to earn interest tax-free, increasing the benefit of today’s savings. The best way to think of an HSA compared to a traditional copayment plan is to imagine your health plan with no co-pays, everything you do whether it’s an office visit, prescription, or surgery is applied to your deductible. An HSA is really a two part equation, 1. You have the Qualified High Deductible Health Plan (QHDHP) linked with 2. A Savings Account, you and your employer have the ability to set money aside, on a pre-tax basis, into your savings account to pay for any qualified medical, dental, or vision expenses. An HSA truly puts you in the driver’s seat when it comes to managing your healthcare related expenses.
Two Part Equation
Medical Plan Purchased from the Carrier: Qualified Deductible Health Plan (QHDHP) Paired with Savings Account Owned 100% by You!
Differences Between an HSA vs. Traditional Co-Pay Plan
Many times when considering selecting an HSA for the first time, the decision is an emotional one, as well as, financial. Sometimes, it is hard to overcome the fear of not having co-pays linked with your medical plan, everyone is different and you always need to make the best decision for you and your family. A couple things to keep in mind when comparing plan options, there are two main differences in how the actual medical plan behaves for an HSA Plan vs. a traditional co-pay plan….
- All expenses incurred must go against your deductible, no more co-pays under the deductible window. All services, office visit, prescription, surgery, etc. are going against your plan deductible first.
- HSA deductible’s must meet certain IRS regulations for the minimum deductible level. In most cases, the HSA deductible Exposure is higher than what you may be use to under a traditional co-pay plan.
- Tax-free contributions
- Tax-free disbursements
- Tax-free interest earned
- Account is owned 100% by you
- Account Balance rolls over year to year, no use it or lose it rule
In almost all situations, HSA plans, compared to traditional co-pay plan options are a cheaper alternative when comparing premium. The key benefit of the HSA Plan is having the Savings account feature, which allows you and your employer to contribute funds, tax free, into an account owned by you. This is a huge advantage, as it allows for you to save money for future expenses or help to use tax free dollars to pay against current expenses as you incur them.
Section 125 Plan – Pre-Tax
Governed under Section 125 of the internal revenue code, employee-funded Section 125 Cafeteria Plans help employees save money by using tax-free dollars to pay for eligible expenses. You will save Federal, State, FICA, and Local tax on any of your voluntary contribution amounts, this is better than contributions to a 401K!
HSA Contribution amounts can be changed at anytime during the plan year. Maybe you had unexpected claims arise during the plan year, and only chose to set a minimal amount aside into your HSA, you can immediately change your election amount so you will have enough set aside in your HSA to cover those particular claims. This is a great benefit when most employee benefits only allow you to make changes once you have had a qualified life status change.
Debit Card Access
BDS offers Debit Card capabilities for employees with HSA Accounts. The Debit Card is through Master Card and works the same way as any debit card an employee may use for their personal checking account. Debit Cards have become a convenient way for employees to fully utilize their HSA funds, without the hassle of submitting paperwork. Debit Cards are only available for clients that do not MERP their HSA Plan. If your plan is a MERPed HSA, we do not provide debit cards and you will need to send in paper receipts or EOB’s for reimbursement from your HSA.
Online Account Access
Every employee will have access to their HSA Account via the web or a smart phone app 24/7. The online resources allow employees to view account balances, submitted claims, and tax documentation.
Claims Vault – This is one of the key features offered through our online services; we are the only HSA Administrator that offers this capability because the concept is patented by our software vendor. Every HSA Account has a claims vault feature in which every claim that was ever paid for the life of your account is stored for quick reference. This is very important since HSA’s currently have very liberal regulations. If you are ever audited for an amount which was taken from your HSA in prior years, you can simply pull those claims up through the claims vault and produce them to the IRS immediately. Otherwise, without this feature, you would have needed to save this information on your own.
Contact us if you have any questions or concerns about your current HSA Account, or if you would like to learn more about how an HSA option offered by your employer can benefit you.