Personal Savings / Health Savings Account (HSAs)

Your good health is the gift that keeps on giving, but only if you help keep it that way. Be ready for your next check-up with a tax-advantaged* health savings account (HSA) that has no monthly or annual fees. It works with your high-deductible health plan (HDHP) to help you pay for medical expenses as they arise. Easily access funds by debit card, and watch your savings grow as funds roll over from year to year.

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Summary
  • Greater personal control over healthcare management and expenses
  • Prepare for qualified medical expenses
  • Earn dividends above standard savings on entire balance
  • Receive higher rates on larger deposits
  • An HSA provides triple tax savings:
    • Tax deductions when you contribute to your account
    • Tax-free earnings through investment
    • Tax-free withdrawals for qualified medical, dental, vision expenses, and more*
  • Contributions are tax-free and can be made by you, your employer, or a third party
  • Funds can be withdrawn at any time**
  • No monthly service fee
  • No minimum balance requirements
  • Unused funds remain in account year after year; no "use it or lose it" policy
  • Keep your HSA in your name, regardless of career or life changes
  • No minimum deposit to open
Eligibility

Requirements

  • Must be covered under a qualified, high deductible health plan
  • Must not have coverage by another type of health plan
  • Cannot be claimed as a dependent on another person's tax return
  • Cannot be enrolled in Medicare

Contribution Limits

  • Contribution limits are set by the IRS. Current 2016 contribution limits are:
  • $3,350 for a single person
  • $6,750 for a family
  • A person age 55 or older may make an additional $1,000 in "catch-up" contributions

What's an HDHP?

A high deductible health plan (HDHP) is an alternative health insurance plan to a traditional HMO or PPO plan. As the name implies, an HDHP has a higher deductible than regular health insurance plans. This may mean more out-of-pocket expenses up front. But once the deductible is met, an HDHP typically pays for 100% of covered medical costs. So in the long run, an HDHP usually means less — often significantly less — out-of-pocket expenses.

But what about that initial high deductible?

That's where combining your HDHP health insurance to a health savings account (HSA) comes in. By accumulating funds in your HSA, you will have the cash needed to cover those costs. What's even better is your HSA is tax exempt.

*Consult a tax advisor.

**You can withdraw funds at any time for any purpose. However, if funds are withdrawn for reasons other than qualified medical expenses, the amount withdrawn will be included as taxable income, and is subject to a 10% penalty.

***Pre-tax deposits can be made directly from payroll, before taxes are taken out. If contributions are made after income was taxed, the amount deposited is tax deductible.

****Withdrawals for non-qualified medical expenses are subject to income tax and a 20% penalty. The 20% penalty is waived for persons 65 and over or who have become disabled.