Excess Contribution: An Excess Contribution is any contribution amount made above an individual’s annual contribution limit as determined by the applicable health plan. The contribution limit can be calculated by prorating the lesser of the health plan deductible or IRS contribution limit by the number of full months the health plan has been in effect.
FSA: A Flexible Spending Account (FSA) is an employee benefit that allows an employee to designate pre-tax dollars to pay for un-reimbursed healthcare or dependent care expenses. The employee determines how much money to contribute to an FSA at the beginning of each plan year. When an FSA is combined with an HSA, the FSA must be designated as a Limited Purpose FSA. A Limited Purpose FSA is generally designated for dental and vision expenses which are not otherwise covered by insurance.
HDHP: Health Savings Accounts must be coupled with a qualified High Deductible Health Plan (HDHP). The guidelines for a qualified HDHP – including minimum deductible requirements and maximum out-of-pocket expenses – are determined by the IRS and are indexed for inflation each year.
HRA: A Health Reimbursement Arrangement (HRA) is an employer-funded, tax-favored savings account employees can use to pay for healthcare expenses. Any accumulated funds are generally forfeited upon termination of employment. When an HRA is combined with an HSA, the HRA must be designed as a Post-deductible HRA, Suspended HRA, or Retirement HRA
HSA: A Health Savings Account (HSA) is a tax-favored savings account you can use to pay for healthcare expenses. Once the contributions are deposited to your HSA, they are owned by you and can accumulate year to year to as savings for future needs. A requirement for opening an HSA is that it be coupled with a qualified high deductible health plan (HDHP) that covers medical expenses after the deductible is met. >
MSA: A Medical Savings Account (MSA) is a tax-favored savings account, often referred to as the predecessor to the HSA. MSAs originated as a pilot program in 1997 for self-employed and small employers (generally 50 employees or less). Like an HSA, MSAs are owned by the accountholder and rolls over year to year to let you build up savings for future needs; however, MSA health plan requirements are more tightly defined and contribution limits are restricted to 65% of the deductible for single coverage and 75% of the deductible for family coverage. With the introduction of HSAs, new MSAs can not generally be established.
Qualified Medical Expense: A Qualified Medical Expense is generally any expense incurred primarily for the prevention or alleviation of a physical or mental defect or illness. A partial listing is provided in Section 213d of IRS Ruling and IRS Publication 502.
Power of Attorney (POA)/Authorized Signer: Since IRS regulations require that only one individual own the HSA account, the accountholder can authorize a spouse or another third-party through power of attorney to write checks or use their debit card. If POA is requested on the original application the check order (if applicable) will include both the accountholder and authorized individual's name. Likewise, if two debit cards are requested, the accountholder's name will appear on one card and the authorized individual's name will appear on the second card.
Rollover: A rollover occurs when you have been issued a check for HSA/MSA funds by a trustee or custodian and you deposit the check into a new HSA/MSA at another trustee or custodian. Please note the rollover timeliness and 12 month restrictions for rollovers.
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