How does a Health Savings Account work?

Who can contribute

The HSA is available with the Healthy Savings Plan, subject to HSA eligibility. Money is portable and yours to keep. It can earn interest or investment returns and pay qualified medical expenses.

Eligibility exclusions are not a complete list

• Coverage through your own or your spouse’s non-HSA-qualified health plan, FSA or HRA can make you ineligible. The book gives Traditional coverage, Tri-Care and Medicare as examples.
• Being claimable as someone else’s tax dependent can make you ineligible.
• The supplied examples are not a full eligibility checklist.

Tax treatment and timing

Contributions are pre-tax; growth and withdrawals for qualified expenses receive the tax treatment described in the book. Contributions begin on the first earned paycheck that includes the first of the month following health-plan eligibility. Contributions can be changed anytime.

Illustration, not your tax result

The book’s example uses $35,000 annual pay and a $1,500 pre-tax contribution, showing $490 tax savings. It is an illustration for a single taxpayer with no dependents; actual savings vary.

Set up and use the account

1. 1

   Confirm your eligibility and current contribution limit.

2. 2

   Choose your contribution through the benefits enrollment process.

3. 3

   Use available funds for qualified expenses and keep claim statements and receipts.

4. 4

   Review your balance and account information with WEX.