Health savings accounts
A health savings account, or HSA, is a way to pay for eligible health expenses with tax-free dollars and save for future needs. The benefits of an HSA include simplicity (use a debit card, check, or pay bills online), flexibility (unused money rolls over from year to year), portability (money goes with you if you retire or leave the company), and value (account is tax-free, and HSA money can be invested*).
Who is eligible to open an HSA?
You’re eligible to open an HSA if:
- You’re covered by a qualified high-deductible health plan (HDHP) on the first day of a given month; both Union Bank medical plans qualify
- You’re not covered by another health plan that is not an HDHP, such as a health plan sponsored by your spouse’s employer
- You are not enrolled in Medicare, Medicaid, or TriCare
- You have not received VA benefits at any time during the preceding 3 months; if you are a veteran with a service-connected disability, this exclusion does not apply
- You are not claimed as a dependent on another individual’s tax return
Eligible expenses
- Medical, dental, and vision out-of-pocket expenses
- Annual medical deductible
- Over-the-counter medicines and prescription drugs
- Qualified out-of-pocket expenses for dependents covered on another plan
- After age 65, you can use HSA savings for any expense (subject to normal income tax)
Personal contributions
Contributions to an HSA can be made via payroll deductions or personal deposits. The advantages of automatic payroll deductions include:
- Using pre-tax earnings, including Social Security tax
- Automatic deposit into your health savings account
- Ability to change your payroll deduction elections each month
While you can still make personal deposits to your account outside of payroll, you will not recover the Social Security tax.
HSA starter contribution
UBT medical plan participants will receive a health savings account starter contribution of $1,000 for associates enrolled in individual medical coverage, or $2,000 for associates enrolled in family coverage. This contribution will be deposited in full concurrent with the first pay date in January. Contributions can only be made after you have set up an HSA. New participants eligible to enroll after January 1 will receive a pro-rated HSA starter contribution.
Compare the features of a Health Savings Account vs. Flexible Spending Account. |
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Feature |
HSA |
FSA |
| Eligibility | Must be enrolled in a qualified high deductible health plan (HDHP) Cannot be enrolled in any other medical coverage |
Limited to dental/vision expenses if HSA participant |
| Funds available | Once funded | Immediately |
| Contribution limit | Based on annual IRS guidelines (see chart below) | $3,300 for 2025 |
| Balance at year end | Remains and rolls over to the following year | Unused funds are forfeited at year end |
| Documentation | Retain your own documentation | Submit to administrator upon request |
HSA contribution limits
The IRS limits the amount of money that can be contributed to an HSA each year. Individuals age 55 and over get an additional catch-up allowance. See table below. If you earn an HSA starter contribution, the amount is applied toward the maximum contribution limit.
| Individual | Family | |
| 2025 Annual contribution limits | $4,300 | $8,550 |
| Catch-up contribution (age 55+ by end of year) | $1,000 | $1,000 |
| *Starter contribution and personal contribution are included in annual contribution limit above. | ||
Investment account*
You can transfer your health savings account to an investment account, where you can invest in mutual funds for potential tax-free growth over time. You must meet a minimum account balance of $500 before you can transfer your money into an investment account.
Flexible spending accounts
Flexible spending accounts, or FSAs, are beneficial for using tax-free dollars to pay for healthcare expenses. UBT offers three types of flexible spending accounts:
- Healthcare FSA (ideal for participants not contributing to an HSA)
You can contribute as much as $3,300 for 2025 tax-free to an FSA. Use these funds to reimburse yourself for certain medical, dental, vision, prescription drug, and over-the-counter medical expenses that are not covered by a health plan, including co-pays and deductibles. The annual dollar amount you elect to contribute is available in full beginning January 1. This product is also available to associates not enrolled in a UBT medical plan. Associates with an HSA are not eligible. - Limited purpose FSA, or LPFSA (ideal for HSA-eligible participants)
You can also contribute as much as $3,300 for 2025 tax-free to an LPFSA. Use this account to reimburse yourself for eligible dental, vision, and over-the-counter medication expenses. This account cannot be used for medical and prescription costs. The annual dollar amount you elect to contribute is available in full beginning January 1. - Dependent care FSA, also known as a DCFSA or DCA (ideal for those with child-care and adult-care expenses)
You can contribute as much as $5,000 tax-free to a DCFSA. Reimburse yourself for eligible child (age 13 and under) and/or adult care expenses that enable you and your spouse to work. Funds in this account are only available after the dollars have been deposited into the account. Note: If you are married, and you and your spouse file separate federal tax returns, the annual maximum contribution for a DCFSA is $2,500 per person.
Calculator: Dependent Care FSA Savings
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