How HSAs Work

As the healthcare landscape continues to change, Health Savings Accounts (HSAs) have become an important way to save toward future health care expenses on a tax-exempt basis. The GRB Health Savings Account is an interest-bearing deposit account used in conjunction with a High Deductible Health Plan (HDHP). 

Contact GRB for more information about current HSA savings limits and other important considerations.

HSA Tax Benefits

The benefits of a Health Savings Account provide account holders with the ability to leverage a number of tax-savings strategies:

1. Contributions to your HSA are tax-free
2. Your HSA earns interest tax-free
3. Withdrawals for qualified medical expenses are tax-free
4. HSA funds roll over year-over-year
5. Your HSA funds are yours to keep and never lost due to changes in employment or health insurance
6. Even if you no longer have a HDHP and can’t make contributions to your HSA, you will still have access to your funds to pay for qualified medical expenses

Important: If you use funds from your HSA for non-qualified medical expenses, you will be taxed on the amount used and assessed a 20% penalty. Once you are 65, you may use HSA funds for non-qualified medical expenses and the amount will be taxed as ordinary income.

Advantages for Employees and Employers

For Individuals

For Employers

Examples of HSA-Qualified Medical Expenses

The Internal Revenue Service (IRS) defines qualified medical expenses as amounts paid for the diagnosis, cure, mitigation, treatment or prevention of a disease, and the costs for treatments affecting any part or function of the body.  These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners.  They include the costs of equipment, supplies and diagnostic devices needed for these purposes. 

Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness.  They don’t include expenses that are merely beneficial to general health, such as vitamins or a vacation.

A full list of examples of qualified medical expenses can be found in IRS Publication 502.

IRS HSA Resources

Using Your HSA at Your Medical Provider’s Office

1. Present your health insurance card to provider. You can use HSA funds to pay any qualified medical expense even if the service isn’t covered by your health insurance plan. This provides tax savings for any out-of-network services you may incur.
2. Although you don’t have any copay while on a HDHP, your provider may contact your insurance company to determine the allowed amount for the service and you may be asked to pay at the time of service. Use your Debit Mastercard to pay for services.
3. If the provider doesn’t ask for payment at time of service, then they will submit a claim to your insurance company.
4. Your health insurance provider will send an Explanation of Benefits (EOB) to you that outlines the amount billed and the amount allowed (negotiated rate) and summarizes your deductible and coinsurance totals.
5. Your provider will send you an invoice reflecting the allowed amount for the service you incurred.
6. Pay the invoice using the HSA Debit Mastercard, BillPay through Online Banking or with a check.

Using Your HSA at the Pharmacy

1. Obtain a legal prescription from your physician and submit it to a pharmacy with your health insurance card.
2. The pharmacy will verify your insurance coverage and determine the amount owed for the prescription.
3. The pharmacy will fill the prescription and you pay the amount owed using your HSA Debit Mastercard.