Health Savings Account (HSA)

An HSA is what makes high deductible health plans (HDHP) so popular. It helps with your current healthcare expenses and helps you build a safety net for the future. Unused money rolls over year after year, earns interest, and can even be invested like a 401(k). Deposits, withdrawals for eligible healthcare expenses, and earnings are federally tax-free. After 65, you can even use the money for non healthcare expenses (subject to your regular tax rate). You own the account, even if you change jobs.

To open an HSA, you must be enrolled in a qualified HDHP, and you may not have non-HDHP medical coverage, including Medicare, Medicaid, or Tricare. You may not be a tax dependent. You (or your spouse) may not have a healthcare Flexible Spending Account unless it’s a limited purpose FSA for dental and vision expenses only.

Non-Qualified Expenses

If you use HSA funds for non-qualified expenses before age 65, you will owe a 20% penalty tax PLUS income tax on the withdrawal. After age 65, if you use HSA funds for non-qualified expenses, you will owe income tax only. Visit irs.gov/publications/p502 for details.

How the HSA Works

Eligibility

You must be enrolled in the High Deductible Health Plan.

Contributions

Rakuten contributes: $1,000 (Employee Only) | $2,000 (Family)

You contribute on a pretax basis and can change how much you contribute from each paycheck up to the annual IRS maximum of $4,300 if you enroll only yourself or $8,550 if you enroll in family coverage. You can make an additional catch-up contribution if you are age 55 or older.

Eligible Expenses

You may use your HSA funds to cover medical, dental, vision and prescription drug expenses incurred by you and your eligible family members.

Using Your Account

Use the debit card linked to your HSA to cover eligible expenses or pay for expenses out of your own pocket and save your HSA money for future healthcare expenses.