Heath Savings Account

*To open a Health Savings Account, you need to be enrolled in the $4,000 or $5,000 High Deductible Health Plan. If you are covered by the $2,000 PPO plan, you are not eligible to enroll in a health savings account.

What is a Health Savings Account?
A Health Savings Account (HSA) is a tax-exempt trust or custodial account created for the purpose of saving and paying for qualified medical expenses in connection with a High Deductible Health Plan (HDHP).

An HSA is established for the benefit of an individual and is “portable.” This means that if you change employers or leave the work force, the HSA stays with you rather than with your former employer. Your HSA at Paylocity is a custodial account that consists of all funds you and your employer contribute to your HSA, all investments you make with or through a custodian using those funds, and all earnings on those funds.

Our HSA is a tax-exempt account, owned by you, established for the purpose of paying for the qualified medical expenses of an individual and/or his or her spouse and dependents. HSAs are designed to provide eligible individuals with triple federal tax benefits: (1) HSA contributions are tax-free, (2) interest and other earnings on HSA contributions accumulate tax-free, (3) amounts distributed from an HSA for qualified medical expenses are tax-free as well, (4) and this money can roll over from year to year.

Who Can Open an Account?
If you are enrolled in a HDHP, you are eligible to open a HSA as long as you:
• Are not covered by any other health plan that is not a HDHP (for example, a spouse’s plan),
• Are not enrolled in Medicare benefits, and
• May not be claimed as a dependent on another person’s tax return

What are HSA Qualified Medical Expenses?
The IRS publishes a list and description of HSA medical expenses in Publication 502, Medical and Dental Expenses, which is available on the IRS website. Typical HSA qualified medical expenses  include:
• Medical expenses, insurance deductibles, co-pays, and other eligible expenses not covered by insurance
• Hospital charges
• Prescription drugs
• Medical supplies
• Over-the-counter drugs, with a prescription from your provider
• Eyeglasses, contact lenses, solutions and eye surgery
• Vitamins, dietary supplements, weight loss drugs, if approved by your doctor
• Dental services, orthodontics and psychologist’s fees
• Smoking cessation programs and related over-the-counter drugs, with a prescription from your provider