If only you had some easy way to pay for health care expenses and save for your future. Oh, that’s right…you do! The Health Savings Account (HSA) lets you set aside a few dollars from each paycheck to help cover health care expenses that come up. Whatever you don’t spend on health care, you can stash away into your nest egg. Plus, the HSA is tax-free, so it’s a great deal.
How It Works
The HDHP with HSA coverage option gives you access to an HSA administered by Smart-Choice. This is a personal bank account that works with your medical plan if you’re eligible.
The HSA allows you to set aside tax-free money to pay for qualified health care expenses, like your medical, dental and vision copays, deductibles and coinsurance.
You can decide whether to enroll in an HSA and how much (if any) money you want to save when you enroll. You can change the amount you save at any time throughout the year.
Once your HSA balance exceeds the required minimum account balance, you're eligible to invest your funds for growth. Similar to a 401(k), you can choose from a variety of mutual funds.
What’s Great About an HSA
While no one likes taking money out of their paycheck, there are a number of advantages to setting aside money in an HSA. Here are six ways the HSA helps you get ahead:
- You get free money from CSL. CSL will contribute to your HSA: $500 if you have employee-only coverage and $1,000 if you cover at least one dependent. That’s a lot of money that you can use to either pay for your medical expenses now or save for your future medical expenses! CSL's contributions will be distributed to your HSA in equal amounts each pay period throughout the year.
- Money is tax-free when it goes in. You can put money into your HSA on a before-tax basis through convenient paycheck contributions. Not only do you save money on qualified health care expenses, but your taxable income is also lowered. For 2024, you can save up to $4,150* if you’re covering just yourself, or $8,300* if you’re covering yourself and your family.
- If you’re age 55 or older (or will turn age 55 during the plan year), you can also make additional “catch-up” contributions to your HSA, up to $1,000.*
- It's tax-free as it grows. You earn tax-free interest on your money. The interest you earn even earns interest!
- It's tax-free when you spend it. When you spend your HSA on qualified health care expenses, you don’t pay any taxes. That means you’re saving money on things like your medical, dental, and vision coinsurance and deductibles.
- It's always your money. Just like a bank account, you own your HSA, so it’s yours to keep and use even if you change medical plans, leave the company, or retire.
- It's easy to use. There are three ways to use your HSA to pay for expenses. You can use your HSA debit card, pay for your expenses up front and pay yourself back from your HSA, or pay your provider directly through Smart-Choice. And you can conveniently manage your account online.
* Limits subject to change per IRS regulations.
After-Tax Is an Option Too
You can elect to contribute after-tax dollars to your HSA through the bank. Your before-tax and after-tax contributions count toward the same annual limit.
Want to Learn More?
View the Smart-Choice HSA Tutorial for info about eligibility, contributions, investments and more!
To be eligible to contribute to an HSA, you must enroll in the HDHP with HSA medical coverage option. If you’re covered by a second medical plan, it must also be a high-deductible option for you to be eligible for an HSA. For example, if you’re also enrolled in your spouse’s coverage, that plan must be a high-deductible option too.
Here are some other eligibility rules to keep in mind:
- You can’t contribute to an HSA if:
- you’re enrolled in Medicare or a veterans medical plan (TRICARE);
- you're claimed as a dependent on someone else’s federal tax return; or
- you or your spouse currently participates (or previously participated within the current plan year) in a general purpose Health Care Flexible Spending Account (FSA).
- Although you can enroll your children up to age 26 in your medical coverage, you can’t use money from your HSA to pay their health care expenses unless you claim them as dependents on your federal income tax return (generally, children up to age 19 or under age 24 if they are full-time students).
- If you contribute to an HSA and want to enroll in the Health Care FSA, reimbursement under the FSA is limited to dental and vision expenses only.
Using Your HSA
When it’s time for you to pay for care or prescription drugs, there are three ways to use your HSA to pay.
- Use your HSA debit card. Just use it when you’re ready to pay for qualified medical expenses, and the funds will be taken directly from your account. Make sure you only use the card for qualified expenses and you have enough money in your HSA to cover them. Log on to Benefits In-Site and click on the HSA tile to check your balance beforehand.
- Pay out of pocket. If you prefer, you can pay for your qualified expenses upfront and pay yourself back through your HSA later. Log on to Benefits In-Site and click on the HSA tile or contact Smart-Choice. You’ll be able to transfer money from your HSA to your regular bank account.
- Set up direct payments to your providers. Another option is to have Smart-Choice make direct payments to your provider from your HSA. Log on to Benefits In-Site and click on the HSA tile to set up direct payment.
Keep Your Receipts
Always remember to save your receipts when you make payments from your HSA, in case you need to prove to the IRS how you spent your HSA funds.
Review the complete list of qualified expenses. Keep in mind that if you use money from your HSA to pay for nonqualified expenses — such as child care, cosmetic surgery, health club fees, teeth-whitening products, or vitamins — you’ll pay taxes on that money and pay an additional 20% penalty tax if you’re under age 65.