Health Savings Account (HSA)

Internal Revenue Code (IRC) Section 223 allows individuals who are covered by a compatible health plan, often referred to as a High Deductible Health Plan (HDHP), to set aside funds on a tax-free basis up to the contribution limit to pay for certain out-of-pocket medical expenses. Health Savings Accounts have a triple tax benefit—funds go into the account tax-free, funds grow tax-free, and remain completely tax-free when used for eligible medical expenses.

Here are some other unique aspects of HSAs as defined in IRC Section 223:

• They are owned by you, the participant.
• They can be funded by you, your employer, or even a third party.
• HSAs carry over from year to year and are portable if employment changes.
• The IRS sets the annual contribution limits and limits the types of health plans that qualify for an HSA.
• HSA funds can continue to be used for eligible medical expenses, even if you become ineligible to contribute in the future.

Contributions can be made by you, your employer, or a third party (e.g. family member or friend). Contributions can either be made on a tax-free basis through a Section 125 Plan or directly into the account on a tax-deductible basis. The IRS sets the maximum annual contribution limit. Generally, HSA contributions do not have to be prorated; however, certain exceptions and conditions apply. Contributions can be made at any time up until the tax filing deadline, typically April 15.

To view the most up-to-date annual contribution limits established by the IRS for HSAs, please visit our Plan Limits page.

To be eligible to contribute to an HSA, you must meet a few basic requirements.

1. You must be covered by a compatible health plan. The IRS defines the minimum deductible, maximum out-of-pocket, and eligible coverage requirements of an HSA-compatible plan. Visit our Plan Limits page to see what those are for the current plan year. Your employer benefits representative should be able to indicate if a specific plan(s) qualifies.

2. You cannot be covered by any non-qualified health plan as it constitutes ineligible coverage. Examples of ineligible coverage include:

• Enrollment in a General Medical Flexible Spending Account (FSA) or Health Reimbursement Account (HRA).
• Coverage under a spouse’s Medical FSA or HRA.
• Coverage under a spouse’s health plan that is not an HSA-compatible health plan.
• Enrollment in a prescription plan which provides benefits before the health plan deductible is satisfied. Note: Programs which provide discounts (but not insurance) on prescriptions are acceptable.

3. You cannot be enrolled in Medicare.

4. You cannot be claimed as a dependent on another person’s tax return.

An HSA is an amazing tax-free savings and health care spending tool, but it can also be a little overwhelming if you don’t know what to expect.

Remember, you own the HSA funds and are responsible for verifying the funds are used for eligible expenses. Always save your receipts!

ACCOUNT COMMUNICATIONS

Once enrolled in a Health Savings Account (HSA) with BRI, you can expect to receive a series of communications regarding your new account. All items should be received within two weeks of account opening.

• Account Welcome Email: Provides confirmation that your account has been opened, along with information on “what to expect”.
• Welcome Letter: Provides detailed account information, including account number and account terms.
• Beniversal Card: Your Beniversal Card will arrive separately. If you already have a Beniversal Card for another account, your HSA funds will be added to your existing card as they become available in the HSA. Please review the card carrier and Cardholder Agreement provided with the card. Once you receive your card, you will need to call to activate it.

You will also receive a number of ongoing documents in the HSA Member Portal. These include:

• Periodic Statements: Account statements will be available on a monthly basis.
• Tax Documents: An HSA requires some tax reporting if you have any deposits or withdrawals in your account in a given tax year. In addition to your tax forms, any pre-tax contributions made through your employer will be reported on the W-2 from your employer.
  • 1099-SA: You may receive one or more forms if funds were withdrawn from your HSA. A separate form is created for each withdrawal (or distribution) type and may include normal distributions, excess contributions, disability, death distribution, and prohibited transactions.
  • 5498-SA: You may receive one form if funds were deposited into your HSA for a given tax year. It reports contributions made in the calendar year, contributions made for the prior year in the current year, rollover contributions, and fair market value of the HSA. A preliminary report is available by January 31 for the prior year. A final copy is provided between April 15 and May 31 to capture any contributions made in the current year for the prior year.

USING YOUR HSA ACCOUNT

Beniversal HSA provides a variety of options for using your account funds.

• Beniversal Card: You will automatically receive the Beniversal Card at enrollment for your HSA. The Beniversal Card can be used at merchants providing medical products and services.
• Online Transfers: Online transfers allow you to send or receive funds from a personal checking or savings account to your HSA. 

PLEASE NOTE: An HSA is a cash balance account, which means you will only have access to the funds you have deposited into your account. If you incur an expense and funds are not available, you will need to pay for the expense with alternative funds and reimburse yourself once funds are available in the HSA.