BASE^® Blog

Health Savings Accounts (HSAs) are a great health benefit tool.  With unmatched tax benefits, the HSA can do so much for health care expenses, financial goals, and retirement.  The BASE® HSA offers the opportunity to make the most out of every health care dollar and invest in the future. 

The Health Savings Account (HSA) is a type of savings account set up for individuals enrolled in a qualifying High Deductible Health Plan (HDHP) to save and pay for eligible health care costs.   Furthermore, an HSA is a triple tax-advantaged account that helps employees pay for their health care expenses and allows for the opportunity to save for the future, invest funds to build wealth, and create a powerful tool for a retirement portfolio.

FACT 1:  Triple Tax Benefits.  With the HSA, contributions into the HSA are tax-free, the funds in the HSA grow on a tax-free basis, and withdrawals for qualified health care expenses are tax-free as well. 

FACT 2:  NO “Use-it-or-Lose-it.”  Unlike the FSA, the funds are not forfeited at the end of the year.  The HSA balance can continue to grow from year to year. 

FACT 3:  Funds Can be Used for Prior Year Health Care Expenses.  As long as the HSA was established before the incurred health care expense, the HSA can be used to reimburse the health care expense years later. 

FACT 4:  Retirement Benefits.  After hitting the age of 65, the HSA can be used for qualified medical expenses or as a retirement fund to live off.    

FACT 5:  HSAs+FSAs Don’t Mix, But...  An individual may not have an HSA if they have other health benefits that pay for health care expenses before the high deductible has been met, such as a Flexible Spending Account.  However, an individual may have a Limited Purpose FSA to pay for their qualified dental and vision expenses. 

FACT 6:  Employer Contributions.  Many employers will incentivize their employees to enroll in a High Deductible Health Plan (HDHP) and HSA, encouraging them to become better health care shoppers.  Many will contribute a specific amount each year to the HSA or match the employee contributions as an incentive.   

FACT 7:  Use for Dependents.  Whether the participant is on a self-only or family health insurance policy, the money in the HSA may also be used for health care expenses for their spouse and current tax dependents.   

Health Savings Accounts (HSAs) do more than just the 7 facts above.  For more information on the BASE® Health Savings Account, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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Any administrator or sponsor of an employee benefit plan subject to ERISA must file information about each benefit plan every year via the Form 5500.  The Form 5500 is an annual report that is a part of the Employee Retirement Income Security’s Act (ERISA) that helps the Department of Labor (DOL) and IRS determine whether the employee benefit plans are operated and managed according to government standards. 

The Form 5500 needs to be filed electronically before July 31 every year.  This date is for Calendar Year plans that run from 1/1-12/31.  For non-calendar years, the filing date is due 7 months after their plan end date.  With the deadline occurring one time per year, it can be difficult for administrators or sponsors to avoid making mistakes, especially if they are overwhelmed by the process.

The BASE® 5500 Solver can help employers effectively prepare and file the Form 5500.  This comprehensive compliance solution generates custom compliant 5500 documents that allows an employer to easily prepare and file the 5500 form electronically each year. 

According to the IRS, an employer who enters in the wrong information, or accidentally leaves a field blank when filling out the Form 5500, could face an employee plan compliance check by the DOL.

Here are some of the most common errors when filling out and filing the Form 5500:

Noting “zero” plan participants. 

All eligible employees and employees with balances in the plan are considered participants. 

Excess deferral.

This error means that plan sponsors have allowed contributions to exceed the annual limit a participant is allowed to contribute. 

Plan termination.

Even if a plan has been terminated, the Form 5500 is still required until all assets are distributed from the plan.  Documenting terminated plans is a part of the annual reporting. 

Fraud.

If the Form 5500 asks if a plan has a loss caused by fraud or dishonesty.  This field should be left blank. 

Frozen plans.

Employers have been known to accidentally use Code 1/ for active accounts when that code is for plans that are frozen or non-active. 

Additional pitfalls. 

A few additional errors are incorrectly entering the EIN and plan number when filing, providing too much information such as returning over 12 months, or not using EFAST software or approved vendors. 

Because the Form 5500 requires such a significant amount of information, it is easy to enter in wrong codes or mistakenly leave sections blank.  However, when using a third-party administrator for your health and benefit needs, this provides some additional checks and balances to help employers effectively prepare to file this form, minimizing the plan-related workload and risk, and curtailing the common errors that could trigger a DOL audit. 

For more information on the BASE® 5500 Solver, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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