Whether you are a South Florida business considering offering an HSA or an employee thinking about selecting an HSA option, before you make that important decision about your benefits package, it’s a good idea to understand the basics about the HSA and what it can mean for you.
What is an HSA?
Strictly speaking, an HSA is a savings account created with pre-tax money taken from employee paychecks, though employers and other family members may also contribute to the HSA. Employees must participate in a high-deductible health plan in order to qualify for the health savings account (and the tax benefits the account provides).
The good news is that employees can use the funds from their health savings accounts in order to pay their medical deductibles. This isn’t the only benefit of choosing a health savings account, though.
Do Employees Lose their Funds at the End of the Year?
Employees can roll the funds from their accounts over year after year. This means if they have larger surgeries or major medical expenses on the horizon, they can keep the money going until a time when it’s needed.
The New York Times reports that some forward thinking employees who begin investing in HSAs young and continue to do so without removing the funds for the duration of their careers, can roll over a substantial savings for medical expenses well into retirement.
Can Employees Pay Health Care Insurance Premiums with HSA Funds?
Generally speaking, the answer is no. Employees cannot use funds from their HSAs to pay their insurance premiums. There are some exceptions.
How Can the Funds be Used?
Account holders may only use the funds in their HSA to cover medical expenses. The penalty for failing to use these funds properly is quite stiff at 20 percent. The fact that it’s possible to continue rolling these funds over, though, means that even if employees do not need the medical benefits this year, they can leave the funds untouched until a time when the funds are needed.
HSA funds can be used for a wide range of treatment options such as:
• Wheelchairs and mobility devices
• Prescribed Vitamins
• Eyeglasses
• Dental Care
• Acupuncture
• Birth Control
• Contraceptive Devices
• Some Elective Surgeries
• In-Home Convalescence
• Cardiac Care
• Blood Transfusions
• Contact Lenses
• Sterilization
• Insulin
• Prescriptions

Unfortunately, the tax implications of healthcare savings accounts are not overly simplistic. Contact us at 305-231-2150 if you have questions about healthcare coverage options.
Canner Brody and Yan CPAs has been operating in South Florida for over 65 years. We have convenient office locations in Miami and Miami Lakes.