- August 9, 2015|
- Category: Financing
An HSA is a tax-exempt trust or custodial account that is established to pay for certain medical expenses. HSAs are long-term plans, meaning money you contribute to your HSA can be rolled-over into the next year. One key benefit of an HSA is that money you contribute to your HSA is deducted from your paycheck prior to taxes being deducted and the money in the account earns interest.
Other Benefits of an HSA
- • Interest generated from an HSA is tax free.
- • Employer contributions to an HSA are excluded from your gross income.
- • Tax deductions can be claimed for contributions you (or anyone other than your employer) make to your HSA.
- • HSAs can be used to pay for the cost LASIK surgery and other laser vision correction.
How Does It Work?
First, you must qualify by meeting a set of IRS requirements such as having a high-deductible health plan. If you qualify, the next step is setting up the HSA with the qualified HSA trustee. In addition to your contributions to the HSA, employers may also choose to make contributions to your account.
Generally, you will pay your medical expenses over the course of the year without any reimbursement from your insurance company until the annual deductible is met. To assist in covering the medical expenses that are not reimbursed up until that point, a distribution from your HSA can be made.
Most elective medical procedures, including LASIK and other forms of laser vision correction, are covered under HSAs. Some employers do not participate in HSA programs, therefore it is recommended that you speak with your Human Resource or benefits manager.