What is a Health Savings Account (HSA)?
An HSA is a tax-advantaged personal savings account that can be used to pay for a participant’s medical, dental, vision, and other qualified health care expenses; now; or, later in life.
An HSA covers Section 213(d) qualified medical expenses. An HSA is funded by the participant, the employer, or both. The HSA can be used for current health care expenses as well as expenses that arise in the future. SimplyHSA allows participants to use and grow funds on a tax-free basis. HSAs are portable, meaning they remain with participants even when employment or other circumstances change.
Who is eligible to participate in SimplyHSA?
In order to establish and contribute to SimplyHSA, a participant must be enrolled in a qualified high-deductible health plan (HDHP). (See current Plan Limits). Dental, vision, disability, accident, and long-term care coverage may be used concurrently and maintain HSA eligibility for the participant.
Coverage under a non-HDHP health plan disqualifies a participant from contributing to an HSA. Participants cannot be covered under a secondary health insurance plan or any other disqualifying health coverage– including that of a spouse. SimplyHSA participants must not be enrolled in Medicare and must not be claimed as a dependent on tax returns of anyone else.
How does SimplyHSA work?
Employers and participants can contribute funds to the participant’s SimplyHSA. Participant contributions are deducted on a pre-tax basis. Money goes in tax-free and comes out tax-free as distributions. SimplyHSA funds may also earn interest, which grows on a tax-free basis.
SimplyHSA funds may be used to pay for the participant’s health care expenses, as needed. Expenses could have been incurred any time after the account was established. Participants may even use funds for expenses that are incurred after the participant is no longer eligible to make contributions.
Participants can manage all aspects of SimplyHSA when they log in to My Account Assistant at www.ebcflex.com. Participants are able to manage contributions, distributions, and access their Avidia Bank account.
Employee and Employer Contributions to SimplyHSA with the BESTflex Plan
After establishing the SimplyHSA, employers and/or participants can begin contributing to it. Participants of the HSA-compatible Limited Health Care FSA can choose to make SimplyHSA contributions through pre-tax salary withholding.
SimplyHSA contributions from employers must generally be comparable for all employees with the same coverage. Employer contributions to SimplyHSA can be different between part-time vs. full-time employees, and employees with self HDHP coverage vs. family HDHP coverage. Employers may also contribute more to non-highly compensated employees than highly compensated employees (see Federal limits).
HSA distributions must be used exclusively to pay for the qualified health care expenses of the HSA participant, participant’s spouse, or participant’s dependent(s). HSA distributions for qualified health care expenses are excluded from income. Even if an HSA participant is no longer eligible to make HSA contributions, qualified health care expense distributions from the account are still allowed.
Distributions not used exclusively for qualified health care expenses must be included as income for the Participant. These non-qualified distributions are also subject to an additional tax; unless the distribution is made after the participant’s death, the participant has become disabled, or the participant has reached