What Is An HSA?
An HSA is your Health Savings Account, available to individuals enrolled in high deductible health plans (HDHPS).
Individuals can use their HSAs to pay for expenses covered under the HDHP until their deductible has been met, or they can use their HSAs to pay for qualified medical expenses that are not covered under an HDHP plan (i.e., dental or vision expenses).
Here’s What You Need To Know
HSAs provide a triple tax advantage to individuals — contributions, interest and earnings, as well as amounts distributed for qualified medical expenses are all exempt from federal income tax, Social Security/Medicare tax and most state income taxes.
There are limits on how much you can contribute annually to your HSA:
- For 2020, the maximum contribution for those with single coverage is $3,550. For those that elect family coverage, $7,100 is the maximum amount that can be contributed.
- Individuals who are age 55 or older may make an additional $1,000 “catch up” contribution.
There are also limits on HDHP cost-sharing:
- For the 2020 plan year, individuals that elect single coverage will have a minimum deductible of $1,400 and $2,800 for family coverage.
- The out-of-pocket maximum is $6,900 for single coverage and $13,800 for family coverage.
How Do You Know If You Are Eligible?
An individual is eligible to establish and contribute to an HSA if they:
- Are covered under an HDHP;
- Are not covered by any other health plan that is not an HDHP, except for certain limited types of coverage;
- Are not enrolled in Medicare; and
- May not be claimed as a dependent on another person’s income tax return.
The employee, employer, family members, or any other person may contribute to an HSA.
What Happens To Unused Funds?
Amounts remaining in an HSA at the end of the year are generally carried over to the next year.
For more information on HSAs and limits, click here.
Don’t hesitate to reach out to the Creative Benefits Team at 866-306-0200 with any questions.