While health insurance premiums aren't generally treated as qualified medical expenses for HSAs, account holders can use their HSA to pay for COBRA premiums. (Photo: Shutterstock)
According to a survey by the National Association of Plan Advisers, 60% of plan sponsors say education about health savings accounts (HSAs) is a pressing need. In fact, 50% of Americans say they are not knowledgeable about HSAs, and 40% believe HSA funds are lost if not spent by end of year. The primary reason cited for so much confusion is lack of education. Employees struggle to understand what an HSA is and how it can help them save money tax-free for medical expenses now and in retirement.
|Distinct advantages
When HSAs first came into existence, they were lumped into a benefits package along with Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs). This was a critical early mistake that has led to persistent misunderstandings. HSAs, unlike FSAs and HRAs, are actual bank accounts where real dollars are deposited. They are not "notional" accounts where the employee must incur an eligible expense before funds are paid out. Likewise, HSAs are not subject to ERISA requirements.
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