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How Do Health Savings Accounts Work?
As a business owner, when you add an HSA to your small business checking account, each of your employees will receive a debit card pre-loaded with the amount they've chosen to set aside for medical expenses. While the employee contributes the money to the account, they are able to do so with pre-tax dollars. This allows your employees to save money by not paying taxes on the dollars used for medical expenses and reducing their annual taxable income.
These debit cards can be used for approved medical costs such as doctor appointments, deductibles, prescriptions, and some over-the-counter medications. There is no need to worry about reimbursements after the fact. Even better, unlike Flexible Spending Accounts (FSAs or Flex Spending) that need to be used up before the end of the year, money saved in a Health Savings Account rolls over every year and can be accumulated for future needs.
Note: The ability to open a Health Savings Account online is not available. Please visit your local branch to get started.