HSAs and ICHRAs

An HSA (Health Savings Account) is an account owned by you, the employee. You can contribute up to a set amount of money on a pre-tax basis. The HSA money can be withdrawn tax-free to pay for a qualified medical expense.

Alternatively, you can let the money accrue interest or invest it in the stock market. If you never use your HSA, you can withdraw it at age 65 tax free. In essence, it becomes a second 401K retirement account in function once you turn 65.

 

Rules:

1. You must have a High Deductible Health Plan (HDHP) in order to contribute to an HSA. This is not just a health plan with a high deductible. The plan must say (HDHP) or (HSA) in the plan title.

 

For example, the Clear Bronze plan is not HSA-eligible. However, Choice Bronze is HSA-eligible.  Screenshot 2023-10-05 at 10.42.37 PM.png

 

2. If you had an HSA in the past, but picked a non-eligible plan, you can still keep and use your HSA. You just can't contribute to it. 

For example, you have $10,000 in your HSA from the past. This year, you pick a Platinum plan that is not HSA-eligible. You can use this $10,000 if you need to. However, you cannot add any more funds to the HSA in tax year 2024.

 

3. ICHRAs & HSAs: what if an employer offers both an ICHRA with Health Wallet and you pick an HSA plan?

You have to spend at least the minimum annual deductible outlined by the IRS (For 2024, this amount is 1600 individual/ 3200 family) before you can touch the Health Wallet money.

Say your plan deductible is $9,000. You're also receiving $500 per month to your Health Wallet. This means that you have to spend at least $1,600 out of pocket before you can touch the total amount of $6,000 in your Health Wallet. For this reason, it's not usually in your best interest to go with the HSA-eligible plan.

 

 

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