A Section 223 Health Savings Account (HSA) is a tax deferred, participant owned bank account that allows the account holder covered under a qualified High-Deductible Health Plan (HDHP) to use pre-taxed money toward qualified medical expenses. Unused HSA funds can be carried over from year to year, which allows participants to save for future healthcare costs as well. These are the newest types of accounts to come out of the Consumer Driven Health Care (CDHC) initiatives.

By offering a High Deductible Health Plan with a Health Savings Account, an employer is able to reduce premiums as these high deductible plans generally have significantly lower premiums than traditional PPO plans. The employer and/or the employees can use the savings on the health insurance premiums to fund the HSA. Since HSA dollars rollover from year to year, this allows employees tax deferred assistance with future medical expenses, as well as a potential retirement savings vehicle.

The HSA is similar to a personal savings/checking account, with most of the features of a traditional checking account. In order to be eligible to contribute to the HSA account, participants cannot be covered by any other health plan that is not an HDHP (i.e. limitations include, but are not limited to the following; participants cannot be covered by a spouse’s insurance that is not a qualified HDHP, cannot be enrolled under Medicare, cannot be claimed as a dependent on another person’s tax return and their spouse cannot have a Flexible Spending Account). Annual contributions that are permitted to be made into an HSA account are limited to the federal maximum and the IRS indexes contribution limits each year.

BMS LLC HSA Administration includes comprehensive employee education of HSAs, routine updates for our Clients based on changes in rules and regulations affecting HSAs, and an Employer Only secured website. BMS offers a variety of HSA custodial banks to choose from, catering to the needs and wants of the producer/broker and the Employer. HSA Custodian arrangements include many banks with extensive online services, investment opportunities, transfer and tracking of HSA account usage.