Health savings account
Employers who offer the high deductible health plan (HDHP) medical option may also offer a health savings account (HSA) to employees. These tax-advantaged accounts can be used to pay for qualified healthcare expenses, including the annual HDHP deductible and coinsurance.
The Board of Pensions partners with HealthEquity to offer a health savings account for employees who enroll in the high deductible health plan medical option and are not covered by any other medical plan. These accounts offer employees a tax-advantaged way to pay for healthcare expenses.
Health savings accounts are also a convenient way for employees to save for future healthcare expenses. Unused funds roll over from year to year, and the account is fully portable, so it can be used after employment ends and into retirement.
The Board urges employers that select the HDHP to offer an HSA as a way to help employees pay for the plan’s higher deductibles and save for future healthcare expenses.
Tax advantages
Employees generally make contributions to their health savings account through pretax payroll deductions. These contributions are exempt from federal income and FICA (Social Security and Medicare) taxes. For ministers of the Word and Sacrament, these contributions are also exempt from SECA taxes.
Employers also may make HSA contributions on the employee’s behalf. These contributions are not taxable to the employee. Both employee and employer contributions count toward the annual IRS limit.
Employees earn tax-free interest on their HSA balances, and distributions for eligible healthcare expenses are tax-free.
Eligible expenses
Employees may use funds from their health savings account to pay for qualified healthcare expenses for themselves or any family member that the employee can claim as a dependent for tax purposes, regardless of whether the family member is enrolled in the Medical Plan.
Qualified expenses are the medical, dental, and vision expenses that can be claimed as a tax deduction. Examples include, but are not limited to, deductible and coinsurance amounts, dental or orthodontia treatment not covered by dental coverage, and prescription drugs.
Eligibility
If you offer the HDHP medical option to your employees, the Board of Pensions urges you to also offer a health savings account. To be eligible to set up and make contributions to an HSA, the employee:
- must be enrolled in the HDHP
- cannot be covered by any other medical plan that is not an HSA-compatible health plan, including a spouse's medical plan
- cannot typically be enrolled in a healthcare flexible spending account
- cannot be enrolled in Medicare or TRICARE
- cannot be eligible to be claimed as a dependent on someone else's tax return
- must be a U.S. resident
Cost
Employers pay $2.25 per month for each employee who establishes an HSA. HealthEquity bills each employer directly for this monthly fee. There are no setup or other annual fees for these accounts.
Questions about health savings accounts?
Employers who currently offer benefits through the Board of Pensions can call 800-PRESPLAN (800-773-7752) (TTY: 711) to speak with an Employer Services representative. They can answer questions about benefits and offer support on administering benefits through Benefits Connect.
PC(USA) employers and congregations are encouraged to reach out to their Church Consultant to help determine which dues package is right for their situation, understand available benefits for staff and how to structure them, and guide faithful benefits decision-making.
Interested in offering benefits for the first time?
PC(USA)-affiliated employers who do not currently offer benefits through the Board can contact
our sales consultants. They can help build a benefits experience for organizations so their employees can thrive.
About HealthEquity
HealthEquity is a national leader in health savings and spending account administration. With more than $14.7 billion in assets under management, HealthEquity guides more than 14 million members across the United States in saving and spending wisely on their healthcare.