afhsa.americanfidelity.comUnderstanding HSAs | American Fidelity

File a Claim Login American-Fidelity-logoFile a Claim Login American-Fidelity-logo American Fidelity Logo American Fidelity Logo Strategy Employee Benefits Communication and Education Enrollment and Admin HR Assistance Tax Savings Compliance Updates Products Benefits Dependent Verification HR Technology Reimbursement Accounts Retirement Savings Section 125 Why Us For Education For the Public Sector For Automotive Account Managers Customer Testimonials Blog Benefits Strategy Reimbursement Accounts Supplemental Benefits Customer Stories Compliance Updates Support Videos Contact Us Claims Login Health Savings Account (HSA) Support HSA Eligible Expenses Reactivate Your Card Frequently Asked Questions General FAQs What is a Health Savings Account? An HSA is an account that allows you to set aside money, tax-free, to pay for eligible medical expenses of an eligible individual, their spouse, and their tax dependents. You must be covered by a qualified High Deductible Health Plan (HDHP) to be eligible to make contributions to an HSA. What is a qualified High Deductible Health Plan (HDHP)? Generally, to contribute to an HSA, you may only have health coverage under a qualified HDHP. A qualified HDHP usually has a higher annual deductible and lower premium than a PPO health insurance plan. Additionally, there are limits on the annual deductible and out-of-pocket maximum that you must pay for covered expenses. Minimum deductible and maximum out-of-pocket levels required for a plan to be a qualified HDHP are determined by the Internal Revenue Service each year and are adjusted for inflation. What are the benefits of an HSA? HSAs offer tax savings in three different ways providing you with more spendable income, regardless of your income level. Individuals may save money tax-free and build assets that they can use in their retirement years; and/or reduce their medical costs right now. Note: State tax treatment may vary depending on the state. Consult your tax advisor. HSAs afford you several tax advantages: Tax-free contributions Tax-free growth Tax-free distributions for eligible medical expenses You own” the account: Balances roll over from year to year, there’s not a use or lose” requirement Even if you change jobs, change medical coverage, become unemployed, move to another state, or change your marital status, your HSA goes with you! Flexibility: HSA dollars may pay for eligible medical expenses as defined by the Internal Revenue Code. Eligible medical expenses would include deductibles, co-payments, dental, vision expenses, or doctor appointments, as long as these expenses are not covered by other insurance. Retirement Savings: Once you reach the age of 65, you can withdraw your HSA funds for non-medical purposes as needed in retirement - you will only need to pay income tax on the withdrawals. What happens to my HSA if I switch employers? You own your HSA, and you may take it with you wherever you work. If you participate in a qualified HDHP at your new employer, you may continue contributing to your HSA. If your employer has an HSA set up under a Section 125 Plan, you may continue to contribute on a pre-tax basis through payroll deduction. If your employer does not offer a qualified HDHP, you may no longer contribute to your HSA. However, you may still use your remaining HSA funds to pay for eligible medical expenses. What if I am no longer covered by a qualified HDHP? If you are no longer covered under a qualified HDHP, you may no longer contribute to your HSA. However, you may still use your remaining HSA funds to pay for eligible medical expenses. Can my HSA be used to pay premiums? Generally, HSA funds may not be used to pay for health insurance premiums tax-free. However, there are exceptions for some premiums that are eligible medical expenses for an HSA. You may use your HSA funds to pay for health insurance premiums if you are collecting Federal or State unemployment benefits, have COBRA continuation coverage through a former employer, or have Medicare part A, B, C, or D (supplemental medical coverage premiums do not qualify). Do the funds in an HSA roll over? Yes, unused funds roll over year to year, so you will not lose any money you don’t use. Can you have more than one HSA? Yes, you can have more than one HSA. You must be covered by a qualified HDHP to contribute to them, and your contributions combined must not exceed the annual maximum limit. What can I purchase with my HSA? The funds you withdraw from your HSA are tax-free when used to pay for eligible medical expenses. Refer to the HSA Eligibility List for a comprehensive look at many of the items covered by an HSA. Do HSAs cover anything not eligible in a Healthcare Flexible Spending Account (HCFSA)? Yes, in addition to covering the same items as an HCFSA, HSAs will also cover COBRA and some long-term care expenses. Can HSA funds be invested? Yes, an HSA offers significant tax advantages and provides opportunities to invest in mutual funds. If you’re looking for an additional way to plan for retirement, an HSA may provide you with another means to save for your retirement goals. There is no time limit on when you can be reimbursed for eligible expenses, you can continue to invest your funds until you truly need them. For example, if you opened your HSA in January 2021 and had eligible medical expenses in June 2021 but decided to pay out-of-pocket, you can be reimbursed for those funds months or even years later. This is a great way to utilize your HSA as a savings tool for retirement. If you reach retirement age with years’ worth of eligible medical expenses, you can still receive reimbursement for these expenses free of taxes. The main thing to remember when applying this strategy, is to ensure you keep all your medical receipts and documentation in case of IRS audit. What happens to my HSA when I die? Upon the death of an HSA account holder, any amounts remaining transfer to the designated beneficiary. If the beneficiary is the surviving spouse, then the spouse becomes the account holder of the HSA and the transfer is not taxable. Any withdrawals that are used for non-eligible medical expenses are subject to income tax. If the beneficiary is not the spouse, then the HSA ceases to be an HSA and is subject to income tax. To update your HSA beneficiary, follow these steps: Login to your online account . Click Manage My Reimbursement Account . Select your HSA under My Accounts. Click View Beneficiaries and add your primary and contingent beneficiaries. Note: When adding beneficiaries, you must allocate the percentage for each person and it must total 100%. Your beneficiary update will not be effective until you complete the allocation. When can I start investing my HSA funds? Account holders can choose to invest their funds in a variety of options. A minimum balance of $2,500 must be maintained in the HSA before investing. You will not be charged fees to invest, however, fees associated with certain funds may be incurred. We recommend you review the fund’s prospectus for additional information when choosing the right investment option for you. How do I pay with my HSA? Benefits Debit Card When you use your Benefits Debit Card to pay for eligible medical expenses, the amount is deducted straight from your account. Out-of-Pocket Reimbursement With an HSA, funds are available in your account as contributions are made. If funds are not yet available at the time a payment is due, you may pay out of pocket and reimburse yourself when you have funds in your account with the following methods: Online Bill Pay You can choose to reimburse yourself for any eligible medical expenses or pay your provider directly from your online account using our online bill pay option. How can I look up my HSA balance? Online Log in to your online account Under Reimbursement Accounts, select your HSA to review your balance and transaction history AFmobile ® Log in to AFmobile to view your HSA balance from the home...