What is a Health Savings Account (HSA)?
- A Health Savings Account is a bank account tied to a High Deductible Health Plan (Krapf’s HDHP medical plan). An HSA enables Krapf employees to pay for current health expenses and save for future qualified medical expenses on a tax-free basis.
- In order to enroll in an HSA, you must be enrolled in the HDHP plan.
- In 2024, employees can make pre-tax payroll contributions of up to $4,150 if they have individual coverage, or up to $8,300 if they have family coverage.
How Does a Health Savings Account work?
- All employees with an HSA are provided with Paylocity spending account.
- Employees will receive a debit card which will provide access to the account to use the funds for any “Qualified Medical Expense”.
- Unused funds will accrue interest on a tax-free basis which rollover from year to year.
- Alternatively, employees have the option to choose their preferred bank for their investment opportunities. This option would prevent you from contributing to your account via payroll deduction.
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Contribution Limits
A Health Savings Account is paired with your high deductible health plan. It allows you to set aside money on a before-tax basis for eligible medical expenses you have now, or you can save it to use for qualified medical expenses in the future (even after you retire). Allows you to build a medical nest egg. Contributions, earnings and withdrawals are tax-free as long as you use the funds for qualified medical expenses.
2025 limits: $4,300 individual; $8,550 family (based on who you cover under the medical plan).
2024 limits: $4,150 individual; $8,300 family (based on who you cover under the medical plan).
The group will be making a contribution to member HSA accounts $250 Single/ $500 EE+Dependents You can update or change your contribution amount at any time within the IRS annual limits.
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Contribution Deadline
Last day to contribute for the 2024 plan year is April 15, 2025.
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Unused funds carry over?
Yes.
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Can I invest the money in my account?
Yes.
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Can I track my account online?
Yes, at https://www.paylocity.com/.
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Qualified Medical Expenses
- Prescription Drugs
- Physician, Vision, or Dental Visits
- Physical or Chiropractic Services
- Birth Control
- Durable Medical Equipment
- Over-the-Counter Medications (physician’s script required)
Note: Any funds used for non-qualified medical expenses are subject to a 20% penalty.
Under the IRS rules for Health Savings Accounts, many additional expenses are HSA-qualified but are not covered by medical plans. See www.irs.gov, Publication 502 or 969.
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Does an HSA affect my taxes?
Yes; you are required to file Form 8889 to disclose your contributions. Speak with your HSA trustee for details or see www.irs.gov, search Publication 969.
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Tax Advantages
- Contributions through payroll deduction are pre-tax and not subject to Federal, State, Local, or FICA taxes.
- Withdrawals for qualified medical expenses are tax-free.
- Growth within the account is tax-free.
- Unused funds roll over from year to year.
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Who is eligible for an HSA?
Krapf employees are eligible to open an HSA if they are:
- Covered by the HDHP medical plan option.
- Not covered by other health insurance that is not a HDHP (including a plan your spouse may have where he/she has selected family coverage).
- Not enrolled in an FSA (unless limited benefit).
- Not enrolled in Medicare Part A or Part B or Medicaid, Tricare (Military Health System).
- Have not used VA Benefits at any time during the previous three months.
- Not eligible to be claimed as a dependent (child) on another’s tax return.
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