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What's an HSA?
This is a bank account you own to pay for eligible health care expenses or you can use it to save toward retirement.
Why would I want an HSA?
It Offers Tax Savings
Money is deposited from your paycheck before it's taxed.*
You Can Spend or Save
Use it now to pay for health care expenses or save it for the future.
Take it with you if you leave your health plan, change jobs, or retire.
How an HSA works:**
- An HSA is offered with a qualified High-Deductible Health Plan (A qualified High Deductible Health Plan (HDHP) typically has lower premiums/plan contributions and higher deductibles than a traditional health plan) and the account is opened through the HSA provider chosen by your employer. You, your employer, and others can put money into your HSA up to a certain yearly limit set by the IRS guidelines.
- Money is deposited from your paycheck into the account before it is taxed, so you don’t pay taxes on those wages.*
- Since you own the account, you can continue contributing to it if you leave your health plan, change jobs, or retire.
- Use your HSA to pay for qualified health care expenses for you and your covered dependents. Some HSAs include a debit card so you can easily pay from your account at the time of service.
- Money in your HSA may earn interest. When your account reaches a minimum balance, you may be able to open a tax-advantaged* investment account.
- You can withdraw the money at age 65, but you’ll need to pay income taxes on it. If you withdraw it under age 65, the money is subject to income tax and may also be subject to a 20% penalty tax.
*HSA contributions and earnings are not subject to federal taxes and not subject to state taxes in most states. A few states do not allow pretax treatment of contributions or earnings.
**Plans vary, but this is how an HSA generally works.
You cannot open an HSA if, in addition to coverage under an HSA-qualified High Deductible Health Plan ("HDHP"), you are also covered under a Health Flexible Spending Account (FSA) or an HRA or any other health coverage that is not a HDHP. Prior to enrollment with an HSA provider, you must certify that you have enrolled or plan to enroll under a HDHP and are not covered under any other health coverage that is not a HDHP. Please refer to your plan documents, including specific information on your HSA, or contact your employer for more information on what’s covered and not covered by the plan.
The HSA provider and/or trustee/custodian is solely responsible for all HSA services, transactions, and activities. Cigna and your employer are not responsible for any aspects of the HSA services, administration, or operation.