What is an HSA?
Health Savings Accounts (HSAs) are tax-advantaged savings accounts.
They cover current and future medical expenses and are funded by either participants, employers or both. HSAs allow participants to then distribute money on a tax-free basis, as long as the distributions are used for eligible, Section 213(d) medical expenses. HSAs are also portable, meaning they remain with the participant even when employment or other circumstances change.
In order to establish and contribute to an HSA, participants must be enrolled in a qualified high-deductible health plan (QHDHP) and cannot have any disqualifying health coverage.
Who is eligible to participate in SimplyHSA?
Individuals wishing to participate in SimplyHSA must be covered by a QHDHP as of the first day of any calendar month. They must not be covered by other non-QHDHP health insurance – including that of a spouse. Additionally, participants must not be enrolled in Medicare and no one can claim them as a dependent for tax purposes.
In general, coverage under any non-QHDHP health plan disqualifies HSA contributions. However, dental, vision, disability, accident and long-term care coverage are not considered disqualifying.
How does SimplyHSA work?
As long as they remain eligible and participate in the QHDHP, employers can contribute funds and/or participants can place a portion of their paycheck into SimplyHSA. Participants can draw upon SimplyHSA to pay for eligible medical expenses.
Participant contributions are deducted on a pre-tax basis.
Using the convenient link on My Account Assistant at www.ebcflex.com, participants can log into their account at the Avidia Bank website and manage all aspects of SimplyHSA including contributions and distributions.
Employee and Employer contributions to SimplyHSA with the BESTflex Plan
After establishing SimplyHSA, participants and/or employers can begin contributing to the account. Participants in the Limited Health Care FSA can choose to make pre-tax SimplyHSA contributions through salary withholding.
SimplyHSA contributions from employers must generally be comparable for all employees in the same QHDHP coverage category. They can be different between part-time and full-time employees and employees with self and family QHDHP coverage. Employers may also contribute more to non-highly compensated employees than highly compensated employees.
HSA distributions that are exclusively used to pay for the qualified medical expenses of the HSA participant, the HSA participant’s spouse or the HSA participant’s dependent(s) are excluded from income. This is the case even if, at the time of distribution, the HSA participant is no longer eligible to make HSA contributions.
Any distribution that is not exclusively used for such qualified medical expenses is included in the HSA participant’s income. Unless it is distributed after they die, become disabled or reach age 65, the distribution is subject to an additional tax.