HSA (Health Savings Account)

What is an HSA?

A Health Savings Account (HSA) is a special tax-advantaged savings account similar to a traditional Individual Retirement Account (IRA) but designated for medical expenses. An HSA allows you to pay for current eligible health care expenses and save for future qualified medical and retiree health care expenses on a tax-favored basis.  HSA's provide triple-tax advantages: contributions, investment earnings, and qualified distributions all are exempt from federal income tax, FICA (Social Security and Medicare) tax and state income taxes (for most states).   Unused HSA dollars roll over from year to year, making HSA's a convenient and easy way to save and invest for future medical expenses. You own your HSA at all times and can take it with you when you change medical plans, change jobs or retire.   Funds in the account not needed for near-term expenses may be able to be invested, providing the opportunity for funds to grow. Investment options include money market accounts, mutual funds, etc. Check with your bank to find out your options.   To be eligible to set up an HSA and to make contributions, you must be covered by a qualified “high-deductible health plan”, or HDHP.  

Keystone partners with HealthcareBank for all of their HSA administration. HealthcareBank is one of the top 10 health savings account (HSA) custodians in the U.S. They offer privately labeled HSA's solely through “silent partnerships” with some of the nation’s largest financial institutions, health plans, and third-party benefit administrators.  *For more information on their Institution see link below*

How does an HSA work? 

 1. To be eligible to contribute to an HSA, you must be covered by a qualified high-deductible health plan (HDHP) and have no other first dollar coverage (insurance that provides payment for the full loss up to the insured amount with no deductibles). 

 2. You may use your HSA to help pay for medical expenses covered under a high-deductible health plan, as well as for other common qualified medical expenses. 

 3. Unused HSA funds remain in your account for later, and may be able to be invested in a choice of investment options, providing the opportunity for funds to grow. Check with your financial institution to see if this is an option for your account.  

HSA's work in conjunction with an HDHP. All the money you (or your employer) deposit into your HSA up to the maximum annual contribution limit is 100% tax-deductible from federal income tax, FICA (Social Security and Medicare) tax, and in most states, state income tax. This makes HSA dollars tax-free. You can use these tax-free dollars to pay for expenses not covered under your HDHP until you have met your deductible.   

The insurance company pays covered medical expenses above your deductible, except for any coinsurance; you can pay coinsurance costs with tax-free money from your HSA. In addition, you can use your HSA tax-free dollars to pay for qualified medical expenses not covered by the HDHP, such as dental, vision and alternative medicines.  


Tax-free contributions to your HSA can be made in a variety of ways, including: 

1. Pre-tax payroll contributions, if available through your employer. 

2. Online transfers — transfer funds directly to your HSA from your linked personal savings or checking account. 

3. Send a check to Keystone Flex for deposit into your HSA. 

4. Rolling over or making a transfer from an existing IRA (Individual Retirement Account) to an HSA, but only once in your lifetime.  


Distributions from your HSA are used to pay for qualified medical expenses. This can be done by the following methods: 

1. Paying for purchases and medical services using your WEX Health Debit Card (if applicable).

2. Using online bill pay through your online HSA portal. 

3. Requesting self-reimbursement through the online portal when you have already paid out-of-pocket for qualified expenses. 

4. Paying with an HSA check.  

Who can have an HSA? 

You must be: 

1. Covered by a qualified high deductible health insurance plan; 

2. Not covered under other health insurance; 

3. Not enrolled in Medicare; and 

4. Not another person's dependent.  

Exceptions: Other health insurance does not include coverage for the following: accidents, dental care, disability, long-term care, and vision care. Workers’ compensation, specified disease, and fixed indemnity coverage is permitted.

**Please check with your employer to see what plans are offered.** 

Healthcare Bank Information

Healthcare Bank HSA Overview (pdf)