What is a Healthcare Spending Account?

Welcome to the SurePayroll minute on HSAs.I’m Michael Alter.

Health Savings Accounts, also known as HSAs, are one type of Section 125 plan.

HSAs are tax-exempt accounts where funds grow to pay for medical expenses.Employees own their HSA accounts, and can take it with them if they change jobs.

In order to participate in an HSA, employees must have a High Deductible Health Plan.This means that an individual pays at least $1100 per year in out-of-pocket medical expenses, and a family pays at least $2200 a year.

HSA’s work like I-R-As for healthcare.Through payroll deductions, HSA contributions are made by the employee, employer or both.Contributions are tax-free and the interest earned is tax free, as long as the money is used for eligible medial expenses.

As an employer, an HSA program is an excellent addition to your employee benefits package.It will help you attract and retain employees, and you don’t have to pay employer taxes on contributed funds.

For the simple answer to small business issues, I’m Michael Alter.