How the HSA Works
Here’s a step-by-step look at how the HSA works.
Step 1: Set Up Your Account
Go to hsabank.com. Already enrolled in an HSA? You’re all set —you will keep using the same account.
Step 2: Start With Money From TEAM
The company will add money to your account: $1,000 for employee-only or employee and spouse coverage or $2,000 for employee and children or family coverage. You will receive half of the company contribution with your first paycheck in January and the other half with your first paycheck in July. You must be employed by the company on both of those dates to receive the full company contribution.
Step 3: Add Money of Your Own
When you open your HSA, you decide how much (if any) you want to contribute, up to IRS limits. Your contributions are taken out of your paycheck before taxes. You can change your contributions at any time on the ADP Employee Self-Service portal at portal.adp.com.
Step 4: Pay for Healthcare
HSA dollars can be used anytime — now or down the road. When you have an eligible health care expense, you can pay for it from your HSA with no taxes taken out. Or, you can pay out of pocket and leave your untaxed HSA dollars invested.
Step 5: Invest for the Future
Think of your HSA as a savings plan for health care. You can invest your HSA in a wide variety of options, including mutual funds, stocks and bonds. There is no tax on HSA interest or investment growth. There are fees for investments or trades. For more information, visit hsabank.com or call 855-731-5220.
HSA vs. FSA: Which One Is For You?
Both are tax-saving accounts, but there are some pretty big differences. Get the details.
Know the Ins and Outs
Keep these rules in mind.
- The money rolls over from year to year. Unlike a Flexible Spending Account (FSA), there’s no use-it-or-lose-it rule.
- The money is always yours. Any money in your account is always yours to keep, even if you leave the company. This includes TEAM’s contributions and any interest from earnings.
- Non-healthcare expenses are taxable. Any money you spend on ineligible expenses is taxable, and you may have to pay a 20% tax penalty.
- Keep your receipts! Make sure to keep copies of your bills and receipts in case the IRS asks you to prove that an expense is eligible for reimbursement.
Tax Advantages x 3@Work
The HSA comes with triple tax advantages.
- Pre-tax savings. Your contributions come out of your paycheck before your taxes are taken out, which means you pay less in taxes. And TEAM’s contributions are not taxable.
- Tax-free earnings. All earnings in your account grow tax-free.
- Tax-free withdrawals. When you use the money for eligible healthcare expenses, there are no taxes to pay.
Here’s how much money of your own you can contribute.
- Employee-Only Coverage
- You can contribute $2,500 ($3,500 IRS limit – $1,000 TEAM contribution).
- Employee and Spouse Coverage
- You can contribute $6,000 ($7,000 IRS limit – $1,000 TEAM contribution).
- Employee and Children Coverage and Family Coverage
- You can contribute $5,000 ($7,000 IRS limit – $2,000 TEAM contribution).
- If You Will Be Age 55
- If you will be age 55 by December 31, 2019, you can contribute an additional $1,000.
How Much Should You Add?
Not sure how much you should contribute to your HSA? Here are some tips.
- Look at next year. What sort of healthcare expenses do you anticipate for the coming year? It’s always a good idea to add money of your own, but if you’re planning on surgery or having a baby, you may want to at least contribute enough to cover your deductible.
- Look to the future. Are you planning on letting your money grow and using it for future expenses during retirement? Then you may want to contribute up to the IRS maximum.
Whatever you decide, the good news is you can change your HSA contribution anytime during the year. Visit the ADP Employee Self-Service portal at portal.adp.com.
You can use your HSA money to pay for eligible expenses for you, your spouse and your tax dependents (including your children up to age 19, or age 24 if a full-time student), whether or not they’re enrolled in a medical plan. (While the TEAM medical plans cover eligible children up to age 26, the IRS has different rules for HSAs.)
Eligible expenses include:
- Medical deductibles and expenses
- Dental deductibles and expenses
- Office visits (in-network and out-of-network)
- Vision expenses, such as eye exams, glasses and contacts
- Prescription drug expenses
- Over-the-counter medications, but only if you have a doctor’s prescription
- Over-the-counter medical supplies, such as bandages, diabetic supplies and contact lens solution (no prescription needed)
For a complete list of covered expenses, visit the IRS site.
Paying for Care
You must have the funds available in your HSA before you can use them. If you pay out of pocket now, you can reimburse yourself from your HSA later, when the funds are available.
You can use the debit card that you will receive to pay for care, or you can pay out of pocket and fill out a form to be reimbursed.