Put tax-free money into an HSA to help pay for current and future health care expenses. If you don’t use all the money, that’s OK. It rolls over, year after year. And if you change employers or health plans, the HSA goes with you.
With an HSA, you can set aside money to help cover your health care expenses in the future, even into retirement. It’s like a 401(k) for health care, with options to invest and grow your balance. And it gets even better — your contributions, earnings and withdrawals are all tax-free.
Your employer may offer the PayFlex Card® with your HSA. If so, you can use the card to pay for eligible expenses at qualified merchants. Don’t have the card? No problem. Just pay for those expenses out of pocket. Then pay yourself back with your HSA through the PayFlex Mobile® app or website. You can even request payment directly to a provider.
Your organization will receive income tax deductions on the funds you contribute to your employees’ HSAs. Along with these tax savings, you’re helping your eligible employees plan, save, and pay for their health care needs today, and into the future. And PayFlex offers exclusive discounts that help increase purchasing power. That can help their health care dollars go even further.
Unlike a 401(k) or IRA, an HSA lets your employees use their account for eligible health care expenses — without paying taxes at withdrawal. This can mean saving thousands on health care costs in retirement. An HSA offers multiple tax advantages. Employees can invest their funds so it grows, tax-free. Plus pretax payroll deductions aren’t subject to the 7.65 percent FICA tax.
The PayFlex Card® can give your employees instant access to their HSA to pay for eligible expenses at qualified merchants. Members can even use our Eligible Expense Scanner in the PayFlex Mobile® app to find out what’s eligible.
Check out the list of common eligible health care expenses. Use the search bar to find specific items and services. Or you can click on the column headers in the table to see which are eligible, eligible with a Letter of Medical Necessity (LOMN), or not eligible.
Not sure which account is right for you? Compare accounts and find the solution that fits you best. Be sure to check your plan to see which accounts are offered.
A Health Savings Account (HSA) is a tax-advantaged health care account that you own. You contribute to it with tax-free or tax-deductible funds. You can use those funds to pay for eligible health care expenses now and in the future. This includes expenses for you, your spouse and your tax dependents. This is true even if your spouse and dependents are not on your health plan. To contribute to an HSA you must have a qualified high-deductible health plan (HDHP).
Each year, the IRS sets the maximum amount you can contribute to the HSA. The funds that you contribute but don’t use will roll over year to year. In addition, an HSA is portable. This means that if you change employers or leave the work force, the HSA stays with you. Finally, with an HSA you don’t have to submit documentation for the funds you use. However, you should keep all your receipts and statements in the event of an IRS audit. These will show that you used the funds for eligible expenses.
To be eligible for an HSA, you must meet certain requirements:
An HDHP has a higher deductible than most health plans. With this type of plan, you must first pay a deductible. Once you pay the deductible, then the health plan can pay a portion of your claims. To be HSA-eligible, a qualified HDHP must meet the following criteria.
Minimum deductibles – A qualified HDHP must have minimum deductibles. If the plan has a deductible that’s lower than this minimum, it’s not a qualified plan for the HSA. For 2020, the minimum deductible amount for a self-only plan is $1,400. For a family plan, the minimum deductible is $2,800. For 2021, those amounts will stay the same. Your plan may have a higher deductible.
Limit on out-of-pocket expenses – A qualified HDHP limits what you pay out of pocket in the plan year. This limit includes what you would pay for deductibles, co-payments and coinsurance. Note: These limits apply to in-network services only. The limits don’t include what you pay for premiums, out-of-network services, expenses that the plan doesn’t cover, or amounts that exceed lifetime limits, if applicable.
For 2020, the out-of-pocket maximum for a self-only plan is $6,900. For a family plan, the maximum is $13,800. For 2021, the out-of-pocket maximum for a self-only plan is $7,000. For a family plan, the maximum is $14,000.
Preventive care – The HDHP can cover preventive care while you’re still meeting your deductible. The plan can cover preventive care at 100%. It may also require a co-pay or coinsurance for certain preventive services. Even though the plan covers preventive care, you would still be eligible to contribute to an HSA. Preventive care includes:
As of July 17, 2019, preventive care also includes certain medicines and services related to chronic conditions including asthma, congestive heart failure, depression, diabetes, heart disease, hypertension and osteoporosis. (For details, see IRS Notice 2019-45.)
Note: The IRS sets these limits each year. They may change from year to year based on a cost-of-living adjustment (COLA).
First, you must have a qualified high-deductible health plan (HDHP) to have an HSA. The date that you’re eligible to contribute to an HSA is based on the effective date of your HDHP.
Once you sign up for the HSA, you must go through a customer identification process (CIP). With the CIP, we verify your name, Social Security number, address and date of birth. If we need more information from you, that could delay the opening of your HSA. Once your HSA opens, that’s the effective date. So, your effective date may be later than the date you’re eligible.
No. Per IRS regulations, you must be enrolled in a qualified HDHP to contribute to an HSA. However, you have until the tax filing deadline of the following year to contribute for the time you were eligible.
It depends on the type of health coverage you have. You can have other insurance that covers the following:
You can also have a discount card and an HSA. A discount card gives you discounts on health care services or products.
*This coverage can be through insurance or some other form of coverage.
Yes. You can have more than one HSA. The amount that you contribute to all HSAs is still limited to the annual contribution limit for the year.
You may also close your old HSA and transfer the funds to your new HSA. You may be paying fees on your old HSA. If you want to move your funds to your HSA with PayFlex, complete the HSA Trustee Transfer Form. Go to Documents & Forms to download it. Be sure to have your other bank send the funds to:
PayFlex Systems USA, Inc., HSA Operations
P.O. Box 3317
Carol Stream, IL 60132-3317
If you’re contributing to an HSA, you can’t have a regular Health Care FSA. However, you can have a Limited Purpose FSA, if offered by your employer. Generally, you can use a limited purpose FSA for eligible dental and vision expenses. This can help you save your HSA funds for other eligible expenses.
If you’re enrolled in Medicare, you aren’t eligible to contribute to an HSA. If you didn’t have Medicare all year, you may be able to contribute for the months before you started Medicare. If so, you can open an HSA. If you had Medicare all year, you can’t open an HSA.
When you use your funds for qualified medical care, you don’t pay taxes on that amount. If you use your HSA funds for an ineligible expense, then you’ll have to pay income taxes. You may also have to pay a 20% penalty tax. There are times when the penalty tax doesn’t apply. If you’re disabled or age 65 or older at the time you use the funds, you don’t have to pay the penalty.
You first need to have a minimum balance in your HSA. This is typically $1,000. You can invest any HSA funds over this minimum balance. You can find this minimum balance amount on the investments page of your online account.
If you do invest any of your HSA funds, those funds would be in an investment account. Any funds in an investment account are not FDIC-insured.
If you’re age 65 or older, you can use your HSA funds for most Medicare premiums. You can’t use your HSA funds to pay for a Medicare supplemental policy.
Yes. You can use your HSA to pay for eligible out-of-pocket health care expenses for you and your spouse.
It depends on how you pay for your employer’s health plan. If you pay those premiums with pretax money, then the answer is no. You can’t use your HSA funds to pay for premiums that you pay pretax.
If you pay the premiums with after-tax money, then you can use the HSA funds for this expense. Once you reach age 65, this is an eligible expense for the HSA.
If you’re eligible to open and contribute to an HSA, then you can do so. This is true even if your spouse has Medicare coverage.
Each year, the Internal Revenue Service (IRS) sets annual contribution limits for HSAs. These limits are based on your high-deductible health plan (HDHP) coverage level (self-only/individual or family). For 2020, the limit for self-only/individual coverage is $3,550. The contribution limit for a family enrolled in a family HDHP is $7,100. For 2021, the limit for self-only/individual coverage is $3,600. For family coverage, the contribution limit is $7,200.
You can contribute in a lump sum or multiple times throughout the year. You can change how much you contribute at any time during the year; you don’t need a life event change. If you’re age 55 or older, you can contribute another $1,000 per year. This is a “catch-up” contribution to help you save for health care expenses in retirement.
You may want to speak with your tax advisor. They can help you understand how much you can contribute to your HSA. You might also find it helpful to review IRS Publication 969.
Anyone can contribute to your HSA. This means that you, your spouse, your employer, a family member and any other person can contribute. All contributions will count toward your annual limit.
Starting with the month that you’re enrolled in Medicare, you’re no longer eligible to contribute to an HSA. However, you can still use your funds for eligible expenses.
Example: You have an HSA on January 1. Starting July 20, you’re covered under Medicare. This means you’re eligible to contribute to an HSA from January through June. For these months, you would prorate how much you can contribute. You have until the tax filing deadline to contribute to your HSA. The tax filing deadline is generally April 15 of the following year. For the 2020 tax year, the tax filing deadline is May 17, 2021.
Yes. You can make a one-time transfer from your Individual Retirement Account (IRA) into your HSA. You would do this as a trustee-to-trustee transfer. The transfer amount is tax-free. It does count toward your HSA contribution limit for the year. You must stay in a qualified HDHP for 12 months after the transfer date. This is the testing period. If you don’t keep HDHP coverage for the entire testing period, you’ll have to pay income taxes on the transfer amount. You may also have to pay a 10% penalty tax. If you have additional questions, you should talk to your tax advisor.
To transfer your funds, complete the HSA Trustee Transfer Form. Go to Documents & Forms to download it. Be sure to have your other bank send the funds to:
PayFlex Systems USA, Inc., HSA Operations
P.O. Box 3317
Carol Stream, IL 60132-3317
The amount that you can contribute to your HSA each year is based on a number of factors. These include your level of HDHP coverage (self-only or family), how long you had the HDHP, and your age. If you or anyone else contributes more than the IRS contribution limit to your HSA, you have an “excess contribution.” You should remove the excess contribution from your HSA. You can complete the HSA Return of Excess Contribution or Opened in Error Closure Form and send to PayFlex. Log in and go to Documents & Forms to download it. The form will give you the information on how to fax or mail it to us.
You should remove excess contributions by the tax filing deadline for that year. If you don’t remove the excess contribution, that amount will be subject to income taxes and may be subject to a 6% penalty tax. If you have more questions about your contributions, you should talk with your tax advisor.
For any year that you have an HSA, you can contribute up to the tax filing deadline. The tax filing deadline is usually mid-April of the following year. For the 2020 tax year, the tax filing deadline is May 17, 2021. This means you can contribute to your HSA up to that day. Just be sure that you don’t contribute more than the IRS contribution limit.
If you contribute for the prior year between January 1 and the tax filing deadline, you’ll need to note that on your contribution. If you don’t let us know, we’ll post the contribution for the current year.
Once you have funds in your HSA, you have a few ways you can use your funds. You can make a payment to your provider from your HSA. If you have a PayFlex Card®, you can use it to pay for eligible health care expenses. If you paid out of your pocket, you can go online and pay yourself back.
When you pay yourself back, you can do so through a linked bank account. This will withdraw funds from your HSA and deposit them in to your personal account. It can take up to 48 hours for you to see the funds in your account.
To link a bank account, log in and go to your account settings to get started.
If you prefer to receive a check, use the online tool to request funds and pay yourself back.
If your employer offers the card, you can use it with your HSA. If you have more than one account with us, you’ll receive one card for all accounts.
Example: You have an HSA and a limited purpose FSA. You’ll receive one card for both accounts.
You can request reimbursement on our website or the PayFlex Mobile® app. If you linked your bank account, you’ll receive the reimbursement as a direct deposit to your personal account. It can take up to 48 hours for you to see the funds in your account.
To link a bank account, log in and go to your account settings to get started.
If you prefer to receive a check, use online tools to request funds and pay yourself back.
You should keep all your itemized statements and receipts. These will show that you used your HSA funds for qualified medical expenses. You would also need them if the IRS ever audits your tax return.
Yes. You can continue to use your HSA funds to pay for eligible health care expenses. However, you can’t contribute to your HSA if you no longer have an HDHP.
Your HSA belongs to you. If you leave your employer or cancel coverage under your health plan, you may continue to use your HSA funds for eligible health care expenses. We’ll send you a letter about the changes you can expect with your HSA. You’ll keep the same PayFlex account and debit card. You’ll have to pay a monthly maintenance fee. This fee will be paid from your PayFlex HSA on the first of each month.
You can still contribute to your HSA for the months that you were eligible to do so. You have until the tax filing deadline to contribute. The tax filing deadline is generally April 15 of the next year. For the 2020 tax year, the tax filing deadline is May 17, 2021.
If you continue your health plan under COBRA or enroll in another qualified high-deductible health plan (HDHP), you may still be able to contribute to your HSA.
If you want to close your HSA, you’ll need to complete the Account Closure Form. Log in and go to Documents & Forms to download the form. You can also call us to request a form. After you close your HSA, you can still view your deposits, payments, and withdrawals on the PayFlex member website.
Yes. You can name one or more beneficiaries for your HSA. You can do this from your online account. You may have done this when you first registered your HSA online. If you didn’t or if you’d like to make changes, you can do so at any time online through your account settings.
If you name your spouse as your beneficiary, your HSA will become your spouse’s HSA after your death. Your spouse won’t have to pay taxes on these funds if they use them for qualified medical expenses.
If your beneficiary is not your spouse, the HSA will be closed. Your beneficiary will receive the funds from your HSA. Note: If you have a spouse and the beneficiary is not your spouse, some states require your spouse’s consent for you to have that beneficiary. The fair market value of the account as of the date of death will be taxable to that person in the year of death (minus any qualified medical expenses paid by the beneficiary on your behalf within one (1) year after your death).
If you don’t name a beneficiary to your HSA, your estate will be your beneficiary. PayFlex will pay the funds to your estate. The value of your HSA will be included on your final income tax return.