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FAQ's
Frequently Asked Questions
Who Can contribute to an HSA?
  Contributions to the account can be made by the individual accountholder, employer or both.
What is the tax treatment of the HSA contribution for an eligible individual?
  Eligible contributions of 100% tax deductible from gross income. However, the tax deduction cannot exceed the individuals earned income.
What is the tax treatment of employer contributions towards an eligible individual’s
  HSA ?
  Employer contributions are not included in compensation paid to the employee. The employer takes the deduction and the funds are not subject to withholding for income tax, and are not subject to other employment taxes (ie: Social Security and Medicare taxes (FICA) and federal unemployment tax (FUTA or railroad retirement tax)).
When can an individual receive HSA distributions?
  An individual can receive an HSA distribution anytime.
How are HSA distributions taxed?
  HSA contributions are excludable from gross income if used for qualified medical expenses during a time period in which the accountholder was eligible for a health savings account. HSA distributions for a non-qualified expense are subject to an additional 10 percent tax and are included as gross income. After the account holder turns 65, becomes disabled or dies, distributions for non-qualified expenses are not subject to the additional 10 percent tax.
What medical expenses are eligible for tax-free distributions?
 

Section 213 of the Internal Revenue Service Code defines medical expenses.  You may also find more information from IRS Publication 502:  http://www.irs.gov/pub/irs-pdf/p502.pdf
What happens to the account if the accountholder is deceased?
  The assets of an HSA go to a designated beneficiary upon the accountholders death or go to their estate if no beneficiary is named. If the spouse is the beneficiary, they can treat the account as their own. A non-spouse beneficiary must include the assets as ordinary income for taxation purposes.
   
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