Health savings account administrators are financial institutions or trusts that manage the funds in a health savings account (HSA). These are deposit accounts that individuals can use to set aside funds to cover medical expenses that an insurance plan does not pay for. An example of such an expense would be annual deductibles or physician fees for cosmetic surgery. The account's deposits are usually either tax free if deducted from an employee's paycheck or tax deductible if an individual is self-employed.
Some health savings account administrators are tied directly to the insurance plan that individuals might carry. Others are not affiliated with any particular insurance company or plan. Employers offering HSAs as a benefit to their employees might choose the administrators for them. The administrators are in charge of collecting and managing the funds until they are requested.
Many health savings account administrators manage an HSA in a fashion that is similar to that of a regular savings or checking account. A few might offer additional services such as certificates of deposit, mutual funds and investments in stocks and bonds. The money that individuals choose to contribute may have restrictions.
One of the restrictions might be directly linked to the withdrawal of funds. Medical savings accounts might allow individuals to contribute as much as they would like per year, but will not allow them to carry any funds over at the end of the yearly period. In other words, if individuals do not use all of the deposited funds on medical expenses during the year, they will lose any amount that is remaining.
Employer administered accounts may automatically withdraw funds for medical expenses that the insurance plan does not cover when employees have a medical need. Since the health savings account administrators for employer sponsored plans might be directly tied to employees' insurance, the administrators are notified when non-covered expenses are incurred. For example, an employee may visit his doctor and be charged a certain amount for lab tests that are not covered since he did not yet meet his annual deductible. As long as there are adequate funds in the employee's medical savings account, the administrator will send a check to employee for the costs of the lab tests.
Individuals who are self-employed can also contribute to a medical savings account. The difference is that they need to research the available health savings account administrators in their local area. If their private insurance carrier administers a plan, they may choose that option. Otherwise, independent administrators can be chosen. Independent administrators can continue managing individuals' medical savings accounts regardless of the insurance carrier.