Health Savings Account (HSA)
A health savings fund you can bank on
An Aetna HealthFund® Health Savings Account* works like a bank account. Employees can use it to pay for their health care expenses. While there are no minimum contribution or balance requirements, the federal government does set limits on how much can be contributed each year. And employers get to decide whether or not to allow pre-tax payroll deductions. Other features include:
- The HSA must be paired with a high-deductible health plan.
- Employees use the account to pay for qualified medical costs or save for future health expenses.
- Contributions are tax advantaged.
- Earnings and distributions for qualified medical expenses are tax free.
Frequently asked questions about an HSA
| Question | Answer |
|---|---|
| Who is eligible? | Any individual covered by a qualified high-deductible plan. |
| Who can contribute? | Employer, individual or both. |
| Does the balance carry over? | Yes |
| Can rollover contributions from another account be made to this account? | Yes, one-time rollover contribution from an IRA is permitted. |
| Is the fund or account portable? | Yes |
| Are there interest or investment earnings? | Yes |
| What are the tax advantages? | Employers with a cafeteria plan enjoy FICA tax savings. |
| Are contributions taxable income to the employee? | Contributions are tax advantaged, including not being subject to FICA or FUTA taxes. |
| Are distributions ⁄ reimbursements taxable income to the employee? | No, if made for qualified medical expenses; otherwise subject to income tax and 20% penalty. |
*HRAs/HSAs are currently not available to HMO members in Illinois.
