Health Savings Account (HSA) Administration
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established the Health Savings Account (HSA). An HSA is an individual health savings account which is owned by the employee and may be used for the payment of allowable current and future medical expenses. Individuals and/or employers can make pre-tax contributions in amounts equal to established limits.
HSA funds are fully vested and may be carried over from year to year, and HSAs are portable from employer to employer. HSAs must be used in conjunction with an HSA-Qualified High Deductible Health Plan (HDHP).
HSAs are available to anyone under age 65 who is enrolled in an HDHP, as long as they are not covered by other health insurance (except for insurance that provides preventive care or specific disease coverage), and who cannot be claimed as a dependent on someone else's tax return. Even though individuals 65 and older are prohibited from establishing or joining employer-sponsored HSAs, they may continue to use funds from their existing HSAs after age 65.
Employers must make comparable contributions on behalf of all participating employees. HSAs are required to be funded through a trust or custodial account. Funds are not subject to taxation as the account grows, or when it is used to pay for eligible medical expenses. Let Clark & Lavey help you in contracting a qualified HSA trustee or custodian for the administration of these plans.
Employee Benefits
