Health Savings Accounts (HSAs)
Like savings and checking accounts, HSAs are personal bank accounts owned by individuals; not the employer or insurance company. HSAs are a type of consumer-driven health plan, where individuals and families have a direct and vested interest in how dollars are spent for their healthcare.
Each year, the Internal Revenue Service (IRS) sets and announces the inflation-adjusted limits for HSAs and HDHPs . These limits include:
- The maximum HSA contribution limit;
- The minimum deductible amount for HDHPs; and
- The maximum out-of-pocket expense limit for HDHPs.
On April 29, 2016, the IRS announced the 2017 calendar year requirement, including deductibles at least $1,300 for an individual or $2,600 for a family, and Out-of-Pocket maximums no greater than $6,550 or $13,100, respectively.
Higher deductibles typically afford employers and employees savings on insurance premiums. While the savings results in higher out-of-pocket expenses for the employee and their families, they can pay for those eligible expenses with tax-free funds from their HSAs. Unlike other types of the tax-advantaged accounts, there are no “use-it-or-lose-it” provisions with HSAs. Funds can accumulate indefinitely over time, or employees can withdraw money from their accounts as needed, for qualified medical expenses.
HRAs can help employees pay for the care they and their families need.