A Health Savings Account (HSA) is a tax-advantaged account for people who are enrolled in an HSA-eligible high-deductible health plan (HDHP). Money is contributed pre-tax and accumulates each year that you’re enrolled — no expiration.
HSAs are used to pay for eligible health expenses, including some dental and vision costs. For more information about eligible expenses, read this article from the IRS.
If your HSA is managed by Gusto, visit your Gusto Benefits Card Manager portal to review transactions, claims, and more. If you offer an HSA through a third party, you can set up benefit deductions for your team.
Note for employers: In order to purchase and provide a Health Savings Account through Gusto, you must first have medical insurance managed by Gusto. If your HSA is managed externally, set up the benefit to collect deductions.
|Health Savings Accounts||2021||2022|
|HSA contribution limit (employee + employer)|| |
|HSA catch-up contributions (age 55 or older)||$1000||$1000|
There are many differences between the two, but one of the biggest distinctions is that the funds in an FSA will expire if unused during a plan year while the HSA funds can be used beyond the plan year.
FSA: Employees can make pre-tax contributions to their FSA accounts, which are pre-funded by the employer and repaid through payroll deductions. Money in FSAs can be used to cover eligible expenses and must be used before the end of the plan year. This is known as the “use it or lose it rule.”
HSA: A tax-advantaged account for people who are enrolled in a high-deductible health plan (HDHP). Pre-tax dollars are contributed to the account and accumulate each year that you’re enrolled without expiring. These funds can be used to cover eligible medical expenses and investments.
Any employee eligible to participate in health benefits and enrolled in the company’s HSA-eligible plan.
Owners taking owner’s draws and 2% or greater shareholders of an S Corporation are not eligible to participate in HSA benefits. 2% shareholders of an S Corporation are eligible to participate in an HSA post-tax, however, this currently isn’t support by Gusto.
To set up a Health Savings Account through Gusto, your company must also have Gusto-brokered medical insurance. At least one of the plans you offer must be a High Deductible Health Plan (HDHP). If you already have benefits with Gusto, you can add an HDHP and HSA at your next renewal.
If you offer an HSA through a third party, you can set up payroll deductions for your enrolled employees.
If your company offers a Health Savings Account (HSA), you can enroll in it from your Gusto account if you enrolled in the company’s HSA-eligible medical plan. Follow the steps below to enroll or waive coverage:
Sign into your Gusto account.
Navigate to the Benefits tab.
Click on Enroll in the HSA box under the “Benefits Available to You” section.
Click Enroll (note: if you don’t want to enroll, click Waive).
Answer the qualifying questions.
Choose the amount you wish to contribute for the remaining policy year.
Click Enroll & Continue.
The option to enroll is available anytime once the benefit is set up. For first time enrollees, the cut-off to enroll is the 20th of the month for the following month (ex: enroll July 20th for August benefits). After that, the team has until the 20th of the month to make contribution changes for the following month.
Once an employee has passed CIP testing and their account updated, the employee will receive a Welcome Packet via email with information about the HSA, including investing options.
To transfer HSA funds from a previous provider to your Gusto-managed HSA with Avidia, follow these steps:
Sign into your Gusto Benefits Card Manager.
Hover over “Resources” and click Forms and Documents.
Complete the form and return to Avidia through one of the three options listed on the form.
Depending on your previous provider, it can take up to 4-6 weeks for the transfer to process.
To make a deposit into your HSA outside of payroll, follow these steps:
When an employee leaves the company, the HSA will remain active through the end of the month following last day of employment.
At that point, the HSA will be converted into an individual account and the employee will receive information in the mail from Avidia directly regarding how to manage the HSA through Avidia.
Changes must be submitted before the 20th of the current month in order to take effect on the first day of the following month (ex: submit changes by April 20th to start May 1). You'll be unable to make changes after the 20th of the last month of your policy.
To make changes:
Sign into your Gusto employee account.
Navigate to the Benefits section.
Click on the HSA Benefits tile.
Click on Change Election.
Enter how much money you would like to contribute per month towards your HSA for the remainder of the policy year.
Click Confirm & Enroll.
Once you have $1,000 in your HSA, you will have the option to invest. You can do so in your Gusto Benefits Card Manager account.
The investing will be through Devenir Investment Advisors, LLC and detailed information can be found in the Welcome Packet that was sent when your HSA went into effect.
If you need to request another Welcome Packet, reach out to our team and we'll provide it again.
HSA funds are available about a week after the paycheck date. When a payroll admin runs payroll, deductions are applied to the paycheck and the deposit is initiated 5 days later. Once initiated, it takes 48 hours to be process by the bank.
CIP testing is required for all people who enroll in a Health Savings Account (HSA). The bank that administers the HSA will run the test to verify the identity of the enrollee. Usually this happens behind the scenes without issue, but occasionally outdated or missing information will cause the bank to reach out for more information.
When you have an HSA with Gusto, our banking partner Avidia will email you to request this additional information. This can include a wide range of documents—like birth certificates, social security cards, and/or more—so they can verify your identify and finish setting up your account.
If Avidia needs more information, follow these steps to make sure that your HSA can be set up:
Note: Gusto can't submit these documents on your behalf so it's important that you work directly with Avidia to complete this last step. Gusto will not begin deductions for your HSA until the CIP testing is complete.
If your company offers a Flexible Spending Account (FSA), Dependent Care FSA, or Commuter benefits through Gusto, we'll email a disbursement report to your benefits administrator on the first of every month.
A disbursement report is the list of all enrolled employees' approved claims and card transactions from the previous month. This report will help you reconcile the MBI/Med-I-Bank debits on your company’s bank account.
If you want the report at a different frequency, need a one-off report, or would like a report with other information, please reach out to our team and we can assist.
Two tax forms are provided for employees who have an HSA: 1099-SA and 5498-SA.
How to find them: Avidia Bank sends applicable forms directly to enrolled employees. You can also find them in your Gusto Benefits Card Manager:
By default, you'll be sent periodic statements by mail, which costs $1.95. To opt out of statement fees, sign into your Gusto Benefits Card Manager account and click Go Green. Once you change this setting, you'll get electronic statements and the fee will no longer be applied.