Approve Group Online Contributions ACH Origination Agreement with HSA Bank, a division of Webster Bank, N.A., to allow implementation of HSA Accounts for County Employees, and Authorize Ray Espinosa/Steve Coffee to execute any necessary documents subject to the approval of the County Counsel's Office.

SBC FILE NUMBER: 119

A Health Savings Account is used in conjunction with a High Deductible Health Plan, which is a new offering in San Benito County.  

The funds contributed to the HSA are not subject to federal income tax at the time of deposit. If not used, HSA funds may roll over and grow over time, thus allowing an employee to grow a fund which may be used for medical expenses.  

If used for non-medical expenses, there is a tax penalty  However, the funds may be withdrawn for non-medical purposes without a penalty upon certain conditions, such as reaching the age of 65 or becoming disabled.  Since HSA funds are deposited by the employee, those funds are owned by the employee.

From the IRS Publication No. 969 (2015):

You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040.

Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.

The contributions remain in your account until you use them.

The interest or other earnings on the assets in the account are tax free.

Distributions may be tax free if you pay qualified medical expenses. See Qualified medical expenses, later.

An HSA is "portable." It stays with you if you change employers or leave the work force.

For 2016, if you have self-only HDHP coverage, you can contribute up to $3,350. If you have family HDHP coverage you can contribute up to $6,750.

There is an additional 20% tax on the part of your distributions not used for qualified medical expenses.  Exceptions. There is no additional tax on distributions made after the date you are disabled, reach age 65, or die.

Employees may examine the following publication for more questions:

https://www.irs.gov/pub/irs-pdf/p969.pdf

The County decided to offer the HSA through Wage Works, which administers the County's Flexible Spending Accounts, as there was no additional charge for them to administer the HSA program.

Approve Group Online Contributions ACH Origination Agreement with HSA Bank, a division of Webster Bank, N.A., to allow implementation of HSA Accounts for County Employees, and Authorize Ray Espinosa/Steve Coffee to execute any necessary documents, including the "Group OnlIne Contribution Form) subject to the approval of the County Counsel's Office.