Health Savings Accounts

Health Savings Account (HSA)

If your company offers a high-deductible health plan (HDHP), you can also offer a Health Savings Account for employees.  

These funds fill in the gaps from the healthcare plan while providing tax advantages. An HSA is also a great way to save for retirement.  

HSAs are paired with high-deductible health plans (HDHPs), while FSAs are available with various types of health insurance plans.

HSAs offer greater flexibility and ownership as funds roll over and accumulate year after year, while FSAs typically operate on a “use it or lose it” basis with funds expiring at the end of the plan year. Additionally, HSAs allow for investment options and provide triple tax advantages.

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See the difference of a Difference Card HSA

  • Triple Tax Advantaged
  • Funds Never Expire
  • Employee owns account for life
  • Easy Account opening. One step: enrollment with employee email is required to distribute terms and conditions to account owners, helping them avoid paper statement fees.
  • Complimentary debit card provided that accesses Section 213 (d) providers. Multi account MasterCard technology utilized. Employees can also use bill pay functions online to pay providers or repay themselves via direct deposit.
  • Integrated investment experience, low threshold to invest, great investment options, low-cost basis. Fractional trading, personalized investment experience, educational opportunities. Employees must have a min $1000 HSA balance to open an investment account.
  • Employees can manage spend, contribute, and invest HSA dollars using our technology. Search for in network quality providers and shop for Rx, compare pricing and generics available.

What is an HSA? 

A Health Savings Account is a personal savings account that allows employees to set aside pre-tax dollars for current and future health care costs for themselves and their dependents, even if they are not covered under your company’s health insurance plan.

Employees who are enrolled in an HSA-eligible high deductible health plan are eligible to open a health savings account.  

Employers have the option to contribute to their employees’ HSAs as well. Health Savings Accounts cover expenses like copayments, doctors’ visits, deductibles, coinsurance and prescription drugs.

How Does an HSA Work? 

An HSA (Health Savings Account) offers benefits to both employers and employees in terms of healthcare expenses and tax advantages.  

For Employers

Employers can choose to offer HSAs as part of their employee benefits package.  

Here’s how it works for employers: 

  • Plan Selection: Employers must select a qualified high-deductible health plan (HDHP) that is compatible with an HSA. HDHPs typically have higher deductibles and lower premiums compared to traditional health insurance plans. 
  • HSA Contributions: Employers have the option to contribute to their employees’ HSAs as part of their benefits package. These contributions are tax-deductible for the employer and are not subject to payroll taxes. Employer contributions can be a set amount or based on a matching formula. 
  • Payroll Deductions: Employers can facilitate pre-tax payroll deductions for employees who choose to contribute to their HSAs. This allows employees to contribute to their HSAs using pre-tax dollars, reducing their taxable income. 
  • Administrative Responsibilities: Employers have certain administrative responsibilities regarding HSAs, such as facilitating the opening of HSA accounts, processing payroll deductions, and providing necessary documentation for tax purposes. 
  • Education and Communication: Employers play a crucial role in educating employees about the benefits of HSAs, how to open and manage the accounts, and the tax advantages associated with HSAs. Clear communication and educational resources from The Difference Card can help employees make informed decisions about their healthcare and maximize the benefits of their HSAs. 

For Employees 

Employees can take advantage of HSAs to save for healthcare expenses and enjoy tax advantages.  

Here’s how it works for employees: 

  • Eligibility: Employees must be enrolled in a qualified high-deductible health plan (HDHP) to be eligible for an HSA. They cannot have any other non-HDHP health coverage, such as Medicare or other comprehensive health insurance plans. 
  • Account Opening: Employees can open an HSA through a bank, credit union, or other financial institution that offers HSA services. Employers may also facilitate the account opening process. 
  • Contributions: Employees can contribute to their HSAs using pre-tax payroll deductions or by making direct contributions with after-tax dollars. Contributions made through payroll deductions offer the advantage of reducing taxable income. The total contributions, including both employee and employer contributions, cannot exceed the annual contribution limits set by the IRS. 
  • Tax Advantages: Contributions to HSAs are tax-deductible, reducing employees’ taxable income. The money in the HSA can grow tax-free through interest, investments, or other earnings. Withdrawals made for qualified medical expenses are tax-free as well. This triple tax advantage provides significant savings and encourages employees to save for healthcare expenses. 
  • Qualified Medical Expenses: Employees can use the funds in their HSAs to pay for qualified medical expenses, including deductibles, copayments, prescription medications, dental and vision care, and other eligible healthcare services. It’s important to keep proper documentation of medical expenses for tax purposes. 
  • Rollover and Portability: The funds in an HSA roll over from year to year and accumulate over time. Employees can take their HSA accounts with them if they change jobs or health insurance plans, ensuring the continuity of their savings and flexibility in managing their healthcare expenses. 
  • Investment Options: Once the HSA balance reaches a certain threshold, employees may have the option to invest the excess funds in various investment options offered by the HSA provider like The Difference Card. This allows the HSA to potentially grow and earn investment returns over time, enhancing the long-term savings potential. 

Employees should review the specific terms and conditions of their HSA provider, understand the rules and limitations, and consult with a financial advisor or tax professional to maximize their savings potential.

What Qualifies for HSA Funds? 

Health Savings Accounts (HSAs) are a popular way to save for medical and health expenses. They offer tax advantages and can be used to cover a wide range of qualified medical costs.  

Some expenses that qualify for the use of HSA funds include:  

  • Doctor and specialist visits 
  • Hospital stays 
  • Surgeries 
  • Prescription medications 
  • Dental treatments (braces, dentures, etc.) 
  • Vision care (glasses, contact lenses, eye exams) 
  • Mental health services 
  • Chiropractic care 
  • Physical therapy 
  • Medical equipment (crutches, wheelchair, etc.) 
  • Fertility treatments 
  • Certain alternative therapies (acupuncture, naturopathy) 
  • Some over-the-counter medications (with a prescription) 

It’s important to review the specific IRS guidelines to confirm eligibility before utilizing HSA funds for these expenses.

Contributions and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans 

2024 2023 Change
HSA Contribution Limit (Employer + Employee) Self-only: $4,150

Family: $8,300

Self-only: $3,850

Family: $7,750

Self-only: +$300

Family: +$550

HSA Catch-Up Contributions (age 55 or older) $1,000 $1,000 No Change
HDHP Minimum Deductibles Self-only: $1,600

Family: $3,200

Self-only: $1,500

Family: $3,000

Self-only: +$100

Family: +$200

HDHP Maximum Out-Of-Pocket Amounts (deductibles, co-payments, and other amounts, but not premiums) Self-only: $8,050

Family: $16,100

Self-only: $7,500

Family: $15,000

Self-only: +$550

Family: +$1,100

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Employee benefits of having a Difference Card HSA: 

  • You can change your election amount at any time during the plan year. 
  • You own the HSA, which means the money in the account is yours to keep and stays with you, even if you change medical plans or leave an employer 
  • Withdrawals for qualified healthcare expenses are never taxable 
  • Unused funds roll over year to year and once an account reaches the investment threshold, you have the option to invest the funds and accelerate your savings. 
  • Once you reach 65, you have the option to use your account for any purpose without penalty. You’ll just owe income taxes on withdrawals for non-qualified expenses. 
  • The Difference Card team is available to help you use your HSA in the best way possible! Just call Member Services!

Employer benefits of offering a Difference Card HSA: 

  • A Difference Card HSA provides savings for your company and your employees 
  • Offering a qualified HDHP paired with an HSA can be a powerful strategy for employers to reduce your FICA and federal unemployment tax liability. 
  • Pairing an HSA with a Difference Card MERP plan can take your savings even further! 

Super Savings with a Difference Card HSA 

A Difference Card HSA brings the power of the triple-tax advantage along with the ease of administration.  

Triple Tax Advantage 

  1. 1. Contributions are made tax-free
  2. 2. Balance earns interest tax-free
  3. 3. Qualified distributions from the account are tax-free

Members can swipe their Difference Card for HSA funds immediately upon contributions being made to an HSA Account. 

To set up a Difference Card HSA, request a proposal today. 

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Helpful HSA Resources

What is an HSA?

HSA Investment Tool

Guide to HSA Investments

Guide to HSA Investments Video Thumbnail


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