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Employee Health Savings Accounts

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Spotlight on: Health Savings Account Essentials

If you offer a high-deductible health plan (HDHP) to your employees, we might suggest offering health savings accounts to them as well.

Also known as an HSA, a health savings account is a tax-advantaged account available to employees enrolled in an HDHP and used to pay for qualified medical expenses.

An HSA can be funded by the employee, the employer or both. There is an annual individual and family limit to the amount that can be deposited.

Unused funds roll over and accumulate year-to-year because the employee owns the account. And the earnings in the account grow tax-free.

The Higginbotham Difference

Whatever your employee benefit priorities may be, you’ll find that our prices are competitive, our fees are clear and our deep industry relationships allow us to go above and beyond while delivering year-round value. So, you can worry less and accomplish more.

Our authentic and transparent approach to employee benefits is designed to put you and your people at the center of the process.

Higginbotham’s team of seasoned health insurance specialists take the time to get to know your unique needs so we present options that make sense for your situation.

And we don’t stop there.

Once you’ve decided on a plan, we empower you with resources to educate your employees on their benefits and ease the transition.

To learn more about how our values-based approach drives value for you and your employees, click here.

Or visit our Insights page to learn more about how to use a health savings account.

Talk to an HSA Specialist

Caring for your business starts with caring for your people. At Higginbotham, we care for both.

A great business can’t exist without great employees and the relationships they have with your customers. With the health of your business and your employees in mind, we get to work.

Because when you take care of your people, so much follows.

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How does an HSA work?

Unlike their flexible FSA counterparts, HSAs can be rigid by comparison.

Only members of a high-deductible health plan are eligible for an HSA.

In addition to limiting membership to employees on high-deductible health plans, HSA eligibility also hinges on the HDHP being the only health care plan carried by the employee.

Medicare recipients and claimed dependents on another disqualifying policy are also not eligible.

If you qualify for a health savings account, it functions like a flexible spending account. HSA funds can be accessed using either a special health savings debit card or through employee reimbursement after filing a claim.

However, unlike an FSA, unused money at the end of an HSA plan year can typically be rolled over into the next plan year.

Another key difference between HSAs and FSAs involves the eligibility of self-employed workers. While an employer must set up a flexible spending account, a health savings account can be set up by any individual that is enrolled in a qualifying high deductible health plan.

Another difference between these two medical savings accounts is that HSAs have slightly higher contribution limits. While FSAs cap contributions at $2,750 for individuals and families, HSAs allow for contributions up to $3,600 and $7,200 respectively.

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Employee Questions, Your Answers

If you decide to offer HSAs, your team may have questions. Here’s a primer to help you give them the information they need.

How to Use a Health Savings Account

An HSA functions like a checking account, providing an account holder with a special debit card that can be used to access funds at point-of-sale using a PIN or signature for verification.

In most cases, qualifying out-of-pocket medical expenses incurred by HSA account holders are eligible for reimbursement if they didn’t use their card to pay at the point-of-sale.

Health savings account funds can be used to pay for qualifying medical, dental and vision expenses for the account holder, spouse and dependents. HSA funds can also be used to cover deductibles and copays.

Which items are HSA-Eligible?

In addition to co-pays, deductibles and direct medical expenses, health savings account funds can also be used to purchase medical equipment, prescriptions and select over-the-counter (OTC) items.

Some of the items on this list are only HSA eligible when ordered by a doctor. Most health savings accounts require a Letter of Medical Necessity (LMN) from a primary care physician confirming a medical need.  A full list of HSA eligible expenses can be found here

Some HSA eligible items include:

OTC Drugs Prescribed by a Doctor

Carpal Tunnel Wrist Supports

Prescription Medication

Respirators and Oxygen

Diagnostic Devices

Physical Therapy

Arthritis Gloves

Hot/Cold Packs

Contact Lenses

CPAP Devices

Hearing Aids

First Aid Kits




Eye Drops


Flu Shots

Ear Plugs





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Our team of employee benefits specialists are here to make your life easier.

If you’re an employer thinking about offering a health savings account, health insurance or another plan to help your employees pay for medical expenses, we’re here to help.

Talk to an Employee Benefits Specialist

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