A health savings account, also known as an HSA, is an employee benefit program that lets employees contribute pre-tax money through payroll deductions to pay for certain health care expenses.
HSAs are available only with high-deductible health plans. Employers may make contributions to their employees' HSAs, and will not be required to pay wage taxes on those contributions.
In order to be eligible for an HSA, an employee must:
Your HSA contributions become available as they're deducted from your paychecks. To view your available HSA funds, click on the Health Savings Account app on your dashboard and look under Benefits Summary.
Your HSA funds are yours to keep for as long as you keep your HSA open. You can continue using your funds to pay for eligible medical expenses even after you leave your company. However, contributing to an HSA requires that you're enrolled in an HSA plan. Your HSA will be terminated with Zenefits on the same day as your termination. You will not receive any further contributions beyond this date. So you won't be able to contribute to your HSA until you enroll in another HSA plan. If you are using Avidia Bank you can check out this Help Center article for more information.
Yes! If you leave your HSA to your spouse in the event of your death, they assume ownership of the account. If your beneficiary isn't your spouse, however, you can only leave them your HSA as a taxable cash distribution.
Once an individual signs up for Medicare Part A or B (which usually happens at age 65), they can no longer make contributions to their HSA, but can continue to access the funds.
Yes. Your HSA balance carries over into the following year with no renewal necessary. HSAs do not have a “use it or lose it” policy.
Employees' HSA contributions are deducted at the same time as other normal deductions, and stay in the company's account. The company's HSA provider will debit these contributions from the company's account (via ACH), and then deposit them in employees' HSA accounts.So for those with HSAs through Avidia, contributions are debited from the company's account after each check date, and then deposited into employees' HSAs a few days later.
Once debited from the company account, contributions take about three days to post to employees' HSA accounts.
HSAs are available only with compatible high-deductible health plans. If you switch to a non-HSA compatible plan, you'll no longer be eligible to contribute to your HSA. Your HSA is yours to keep as long as you keep it open, so you'll still be able to use the funds in your HSA.
If your account is with Avidia Bank, you can continue to use your Zenefits card to access the remainder of your funds.
You will still see the Health Savings Account app on your dashboard.
If you are covered under a high-deductible health plan (HDHP), then you are eligible to contribute to an HSA. You must be considered an eligible individual on the first day of a month to take an HSA deduction for that month.
According to the Last-month rule, as long as you are an eligible individual on the first day of the last month of your tax year (December 1st for most taxpayers), then you are considered an eligible individual for the entire year.
The IRS states that you must remain an eligible individual during the Testing Period. The testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. If you fail to remain an eligible individual during this period, other than because of death or becoming disabled, you will have to include in income the total contributions made that would not have been made except for the last-month rule.
There is not a monthly HSA contribution limit, there are only annual contribution limits. To calculate how much you may contribute to meet your annual contribution limit, you may follow the table below:
Example. You are an eligible individual and have family HDHP coverage. In March you divorce and change your coverage as of April 1 to self-only. The contribution limit for the 3 months you both were considered to have family coverage is $ 1687.50 ($ 6750 × 3 ÷ 12). Your contribution limit for 9 months of self-only coverage is $ 2512.50 ($ 3350 × 9 ÷ 12).
For more information about HSA contributions and Form 8889, you may visit this IRS Page.