Health Savings Account
A Health Savings Account (HSA) requires the employee to be covered under a Qualified High Deductible Health Plan (QHDHP). The employee and/or employer contribute funds to the HSA on a pre-tax basis. Funds can be used to pay for eligible medical expenses not covered under other insurance. Withdrawals for non-eligible expenses are taxed at a 20% penalty and included in income. After age 65, withdrawals can be made for non-medical purposes and the owner pays only income taxes – making it an alternative for retirement planning. The funds belong solely to the employee and never revert back to the employer.
Through payroll deductions both the employer and employee save FICA taxes of 7.65% of the contributions. The employee reduces his or her federal income tax liability and in most cases state income tax liability.
With a Health Savings Account, funds can be used to pay for eligible medical expenses not covered under other insurance. Eligible expenses include:
Doctor’s office visits
Medical deductibles and co-insurance
Approved prescriptions and over-the-counter items
Vision and dental costs
Participants are issued a debit card that can be used at any point-of-sale or to withdraw money from an ATM. ATM withdrawals cost $2.00 per transaction. Checks can also be used to withdraw funds. The charge for balances less than $5,000 is $2.50/month. Balances earn interest based on the daily balance according to the following as of June 2015:
< $2,500.00 .05%
$15,000 - $24,999 .40%
See rates and fees here http://www.hsabank.com/~/media/files/fees_s1
Participants also have the option of using the brokerage services of TD Ameritrade and placing trades online through http://www.tdameritraderetirement.com/. The brokerage offers stocks, bonds, and over 11,000 mutual funds. Participants who use the brokerage option are charged applicable transaction fees.