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Why Enroll in a Health Savings Account?

It’s your money. Why not keep more of it? With an HSA you can.

Now, more than ever, health care dollars need to go further. With a health savings account (HSA), you’ll pay less in taxes and increase your take-home pay. Enroll in an HSA and keep more of the money you’ve earned. That’s real savings, real simple.


What is a health savings account (HSA)?

An HSA is a tax-advantaged personal savings account that can be used to pay for medical, dental, vision and other qualified expenses now or later in life.  To contribute to an HSA you must be enrolled in a qualified high-deductible health plan (HDHP) and your contributions are limited annually.  


How it Works

You and your employer can deposit money into your HSA account, up to an annual per-person or family limit set by the IRS. When you enroll, an account will be created for you at Peak1. You’ll be given access to a secure, easy-to-use web portal where you can track your account balance, view your investment accounts, and submit requests for reimbursements.

In addition, you’ll receive a convenient debit card to make it easy to access the money in your HSA. The card contains the value of your HSA cash account and you can use it to pay for eligible services and products not covered by your health insurance. When you use the card, payments are automatically withdrawn from your account, so there are no out-of-pocket costs and you won’t have to submit receipts to verify the purchase. Just swipe the card and go. It’s that easy!


You can use your HSA dollars and your prepaid benefits card to pay for:
  • Routine health care: office visits, X-rays, lab work
  • Hospital expenses: room and board, surgery
  • Medications: prescription and over-the-counter (OTC) drugs when prescribed by a physician
  • Dental care: cleanings, fillings, crowns
  • Vision care: eye exams, glasses, contacts
  • Copays and coinsurance (the portions of health care bills paid by you)
  • Eligible over-the-counter (OTC) items* such as:
    • First aid dressings and supplies – bandages, rubbing alcohol
    • Contact lens solutions and supplies
    • Diagnostic products like thermometers, blood pressure monitors, cholesterol testing
    • Insulin and diabetic testing supplies

*The list of eligible OTC items changed per the Patient Protection and Affordable Care Act of 2010. Contact Peak1 for more information or visit www.irs.gov for details.


HSAs Offer a Triple Tax Advantage

Money goes in tax-free.  Most employers offer a payroll deduction through a Section 125 Cafeteria Plan, allowing you to make contributions to your HSA on a pre-tax basis.  The contribution is deposited into your HSA prior to taxes being applied to your paycheck, making your savings immediate.  You can also contribute to your HSA post-tax and recognize the same tax savings by claiming the deduction when filing your annual taxes.

Money comes out tax-free.  Eligible healthcare purchases can be made tax-free when you use your HSA.  Purchases can be made directly from your HSA, either by using your benefits debit card, online bill pay, or check - or you can pay out-of-pocket and then reimburse yourself from your HSA.

Earn interest, tax-free.  The interest on HSA funds grows on a tax-free basis.  And, unlike most savings accounts, interest earned on an HSA is not considered taxable income when the funds are used for eligible medical expenses.  To see a list of mutual funds available, click here.


HSAs Offer a Triple Tax Advantage

The only time you pay taxes or penalties on your HSA funds is if you make a non-eligible purchase, or if you contribute more than the yearly maximum contribution limit.  However, both circumstances can be corrected free of tax penalties by April 15th of the following calendar year.