Distributions from an HSA are solely up to the employee (account holder). For the employee to receive complete tax
breaks on the HSA funds the distributions must be for an eligible expense and must be for eligible expenses incurred after the date the
HSA is established. The employee may use the funds for reimbursement outside of eligible expenses, but those funds are
subject to taxes and a 10% additional tax penalty. Since the account is owned by the employee, the employer is not subject
to any penalties or other taxes.
American Fidelity offers 3 options to make distributions easy for your employees:
