- Individual plan: $3,650, up from $3,600 in 2021
- Family plan: $7,300, up from $7,200 in 2021
- Individual plan: $1,400, the same as in 2021
- Family plan: $2,800, the same as in 2021
- Individual plan: $7,050, up from $7,000 in 2021
- Family plan: $14,100, up from $14,000 in 2021
- Maximum annual employer contribution: $1,800, the same as in 2021
HSAs explained
An HSA is a special bank account for your employees’ eligible health care costs. They can put money into their HSA through pre-tax payroll deduction, deposits or transfers. As the amount grows over time, they can continue to save it or spend it on eligible expenses. Employers can also contribute to the accounts, but the annual contribution maximum applies to all contributions in total (from the employee and the employer). The money in the HSA belongs to the employee and is theirs to keep, even if they switch jobs. The funds roll over from year to year and can earn interest. Some plans also have investment options for the funds. There are a number of benefits for employees who have HSAs:- The money an employee contributes to an HSA is not subject to income taxes.
- If employees contribute through payroll deduction, the amount is taken from their pay before taxes are taken out, which reduces their overall taxable income.
- They are not taxed on withdrawals, and HSAs even help reduce taxable income.
- If employees contribute to their HSA with after-tax money, they can deduct their contributions during tax time on Form 1040.
- Employees can tap the funds for any approved out-of-pocket medical expenses.
- Employees can make withdrawals with a debit card or check specific to the HSA.
- Employees can use the money in their HSA to pay for care until they reach their deductible, out-of-pocket expenses like copays and coinsurance.
- They can use the funds to pay for other eligible expenses not covered by their HDHP, like dental or vision care (eye exams and corrective lenses).
