What are the advantages of an HSA?
Contributions are generally tax deductible and the interest and/or earnings from the investment are exempt from current income tax. • Distributions are also excluded from gross income when used for qualified medical expenses for the participant, the participant’s spouse or the participant’s dependents. • Contributions remain in the HSA from year to year until used (no “use it or lose it” rules apply). • An HSA account is owned by the individual (not the employer) and is completely portable.
HSAs encourage savings for future expenses, such as medical, out-of-pocket and long-term care expenses. • Accounts are owned by the individual, not the plan or employer. • Accounts are completely portable, regardless of the individual’s employer, employment status, area of residence, age, marital status or future medical coverage. • There is no requirement to use unspent balances within a specific timeframe, unlike a Flexible Spending Account (FSA). • Accounts grow through interest and investment earnings. • All contributions are made to your account pretax.
• Contributions you may make through payroll deposits are made with pre-tax dollars, meaning they are not subject to federal (or most state) income taxes. • Contributions to your HSA made with after-tax dollars can be deducted from your gross income, so you pay less income tax at the end of the year. • The interest you earn on your HSA balance is not taxed. • Withdrawals from your HSA for qualified health care expenses are not subject to federal income tax. As long as you use your HSA funds for qualified health care expenses, you will not have to pay federal (or most state) income taxes. • Alcoa will make a contribution to your account; this contribution is excluded from your gross income. • The money is yours; it grows and remains with you, even if you change medical plans, leave Alcoa, or retire. There are no “use it or lose it” rules. • If you are no longer eligible to make contributions because you are not enrolled in a high-deductible health plan, funds in your account may still b
