Rex Explains: HSA Accounts


If you are a patient trying to understand your health insurance plan, or dealing with an influx of medical bills, you’re probably encountering any number of acronyms – from HDHP to EOB to HMO, the list of lingo is endless! One acronym patients may hear and not immediately recognize or understand is HSA, or “health savings account.”  

One of the expectant mothers our RexPay team interviewed expressed this confusion. The patient said:

“I had an HSA once through my job but I never understood it’s purpose. It just sort of had a bunch of money in it that I couldn’t access and didn’t know what to do with.”

Here at RexPay, we want to give patients all of the tools they need to ensure their payment process is as easy as possible. So here’s our rundown of one of those pesky acronyms: HSA, and a bit of information about how it can help you! 

What is an HSA? 

An HSA is a helpful way to set aside money for current or future medical expenses. While that sounds pretty straightforward, don’t be fooled – a health savings account has a few helpful tricks up its sleeve… 

1.) Tax deferable 

  • An HSA works like regular bank account, but has some big tax benefits! First, any money you put in your HSA is ‘pre-tax’ or ‘tax deductible.’ This means that your HSA contributions are made before your main income is taxed, giving you a little more bandwidth and potentially lightening your tax burden. You also don’t have to pay taxes on your HSA account’s growth, or on withdrawals you make for eligible medical expenses.

2.) Private 

  • An HSA is in your hands – even if you choose to set up your HSA through your employer, you have autonomy over how much you want to contribute (as long as it doesn’t go over the government’s set HSA maximum for the year).

Paw Tip: HSA accounts also have investment potential! This means that you have the ability to use HSA money to invest in mutual funds and stocks and potentially generate more money.

3.) Portable 

  • With an HSA, there is no ‘use it or lose it’ policy, meaning that the money in your health savings account will roll over from year to year. This is different from an FSA account, or a Flexible Spending Account, which is another type of account with the potential to save money on medical bills. FSA money expires if unused, but HSA money does not expire, so you don’t have to worry about losing your savings!

How do I use an HSA? 

First, you or your family have to be enrolled in an HDHP, or a “high-deductible health insurance plan.”  

Usually, you’ll get a debit card or some checks linked to your HSA balance – you can use those towards your medical expenses. You might have an HSA already set up through your workplace, so check out your benefit details and see if you can set up an automatic contribution, directly from your payroll. 

Once it’s set up, you can use your HSA to pay for a long list of qualified medical expenses. This list includes prescription medications, over-the-counter prescription drugs, some medical supplies, and most vision and dental costs! You can also use the amount in your HSA to help meet your health insurance deductible copays, and coinsurance charges, tax free. 

Paw Tip: If you want some additional information on HSA-usable expenses, take a look at the rules published by the IRS Publication 502 and Publication 969! 

One good rule of thumb - don’t use your HSA for non-medical expenses. It’s primarily a health savings account, which means the government will charge tax on non-eligible costs (i.e. non-medical, or costs not included in the IRS’s lists!). They might even slap on a 20% penalty, so it’s wise not to dip into your HSA for anything other than eligible expenses! 

Paw Tip: You can pay with your HS-A card through the RexPay app!

If you have more questions about an HSA and how it can help you, be sure to reach out to the RexPay team. Visit the RexPay website and learn more about the app today!