Employers: See our response to COVID-19 |
Members: See how COVID-19 impacts your accounts
    Skip Navigation LinksHome / Learn / How an HSA works

How an HSA works

By selecting an HSA-powered plan with a higher deductible, you are qualified to contribute tax-free* money into a health savings account (HSA). Your HSA funds can then be used tax-free to pay for qualified medical expenses. In addition, your HSA deposits earn tax-free interest and carry over from year to year, even if you change jobs or retire. Because HSA-powered health plans cost less than traditional plans, the money saved can be used to contribute to your HSA.

HSA eligibility
To make tax-free* deposits to an HSA, the IRS requires that you:

  • Are covered under a high deductible health plan (HDHP)
  • Are not covered under any other non-HDHP health coverage. Examples of non-HDHP health coverage include: Medicare, your spouse’s or parent's health insurance or a health FSA or health reimbursement arrangement (HRA) which covers pre-deductible medical expenses
  • Have not received any medical benefits (non-dental, vision or preventive) from IHS (Indian Health Service) or the VA (US Department of Veterans Affairs) which is not treatment for a service-connected disability at any time in the previous three months
  • Are not enrolled in TRICARE
  • Cannot be claimed as a dependent on someone else's tax return

For doctor visits

What to expect at the doctor's

Receive services

With an HSA-powered plan, no copay is required at the time of service. Be sure to present your insurance ID card. If your health care provider requires a deposit, it will be applied to your invoice.

Your health plan has a network of providers that it recommends, however you can use HSA funds to pay any qualified medical expense even if it is not covered by your insurance. This provides significant tax savings on out-of-network services.

Provider bills health plan

Provider submits a claim to your health plan for services rendered.

Health plan sends EOB

An explanation of benefits (EOB) is sent to you outlining the negotiated/allowed charges and summarizing your year-to-date deductible and co-insurance totals.

Provider sends invoice

The provider sends you an invoice, or statement, reflecting the allowed charges. Make sure the amount matches the EOB sent to you by your health plan, if not, contact your health plan.

Pay invoice with HSA

You can pay with your HealthEquity® Visa® Health Account Card† or set up an online payment that is sent directly to the provider or as a reimbursement to you.

For prescriptions

What to expect at the pharmacy

Prescription

Obtain prescription

Obtain a legal prescription from your doctor for needed medication and submit it along with your insurance ID card to a pharmacy.

Pharmacy verifies insurance coverage

The pharmacy checks with your health insurance on-the-spot to determine the amount you owe for the prescription.

Pay for your prescription

The pharmacy fills your prescription and you pay the determined amount owed. The expense is automatically applied to your deductible and/or coinsurance. Your HSA debit card is a convenient method of payment.

*Note regarding tax-free statements:
HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state's specific rules.
†This card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc.