Get started with a Kapnick HSA Health Savings Account
Kapnick HSA – Health savings accounts (HSAs) are a growing trend in health care. An HSA is a tax-exempt savings account established for the purpose of paying for the qualified medical expenses of an individual and/or his or her spouse and tax dependents.
Kapnick HSAs are designed to provide eligible individuals with triple federal tax benefits:
(1) HSA contributions are tax-free
(2) Interest and other earnings on HSA contributions accumulate tax-free, and
(3) Amounts distributed from an HSA for qualified medical expenses are tax-free as well.
In addition to tax benefits, HSA plans have grown in popularity because they offer potential health care cost savings to employees. For example, individuals covered under an HSA are more likely to seek preventive care, choose generic drugs, not misuse the emergency room and use online tools to research health care and providers.
HSAs are offered in combination with high deductible health plans (HDHPs). To be HSA-eligible, an individual must be covered under a qualified HDHP and not also covered by another health plan that is not an HDHP (with a few exceptions, including disability, dental care, vision care and long-term care insurance). HDHPs generally have lower monthly premiums and higher deductibles than traditional health plans. HSAs can cover medical expenses until the HDHP deductible is reached. The idea of this design is that the HSA pays for routine, smaller health expenses, while the HDHP offers protection in the event of a catastrophic medical expense, such as an unexpected illness, injury or hospitalization.
Because HSA amounts are non-forfeitable, amounts contributed to an HSA can increase savings for future health care needs, even into retirement.
In general, money placed into an HSA can be withdrawn at any time. Any HSA withdrawal used for a purpose other than to pay for qualified medical expenses is taxable as income and subject to a 20% excise tax.
What is an HSA?
A Health Savings Account (HSA) helps you do what you know you should do – save money – plus, an HSA also allows you to invest it and spend it tax free! One catch is that you have to spend the money on qualified medical expenses, which isn’t much of a catch when you consider the long list of qualified medical expenses and your family’s total healthcare expenses.
An HSA combines a high deductible health insurance plan with a tax-favored savings account. Money in the savings account can help pay for your qualified medical expenses or you can save and use it for qualified medical expenses once you retire. The balance in your health savings account rolls over from year-to year and the account earns interest and is yours to keep, even if you leave the company.
HSAs are one tool in the ever-expanding toolbox of consumer driven health plans. Designed by the U.S. Government, HSAs help you, the consumer, play a more informed and active role in controlling your family’s healthcare costs.
Who is eligible for an HSA?
Anyone who is:
º Covered by a high-deductible health plan (HDHP);
º Not covered under another medical plan that is not an HDHP;
º Not entitled to (eligible for AND enrolled in) Medicare benefits; or
º Not eligible to be claimed on another person’s tax return.
What is a high-deductible health plan (HDHP)?
A high-deductible health plan is a plan with a minimum annual deductible and a maximum out-of-pocket limit as listed below. These minimums and maximums are determined annually by the Internal Revenue Service (IRS) and are subject to change.