What is a Health Savings Account?
A Health Savings Account (HSA) is a tax-exempt account established solely for the purpose of paying out-of-pocket qualified medical expenses for you and your family when covered under a high-deductible health plan (HDHP). The funds are managed and controlled by you without restrictions of healthcare professionals and facilities. These funds can be rolled over year after year allowing you flexibility to manage routine as well as unexpected healthcare expenses. And like most retirement account, your HSA follows you if you change employment.
- Health Savings Account (HSA)
- No minimum balance
- No per check charge
- No opening deposit required
- No monthly fee Visa Debit Card ($6.79 one-time initial card fee)
- $1.50 monthly maintenance fee
- $25 service fee at account opening
- Check safekeeping standard
- Interest bearing account
- Convenient monthly combined statement
- Free Internet Banking and Bill Pay
- Interest compounded daily
- Overdrafts are not permitted on account type.
See Bank Services in the Fee and Information Schedule for other possible fees connected with this account.
Any checks or other withdrawals from the account will be considered distributions and will be reported as being qualified medical expenses, unless you notify us otherwise within 15 days of the distribution.
At our discretion, your interest rate and annual percentage yield may change.
The agreement between the custodian and depositor may be amended time to time to comply with the provisions of the Internal Revenue Code and related regulations
Bank deposits are Insured by the FDIC.
Who is eligible for an HSA?
Any adult can contribute to an HSA if they:
- Have coverage under an HSA-qualified high deductible health plan (HDHP)
- Have no other first-dollar medical coverage (other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term car insurance are permitted).
- Are not enrolled in Medicare.
- Cannot be claimed as a dependent on someone else's tax return.
How can I start an HSA?
By working with Security National Bank, you set up an HSA in much the same way as an IRA.
What are the federal tax benefits of an HSA?
Contributions to an HSA are fully deductible; the earnings grow tax deferred, and distributions for qualified medical expenses are tax-free. Please consult with your investment and tax advisor for guidance.
Who can contribute to my HSA?
Contributions to your HSA can be made by you, your employer, or both. However, the total contributions are limited annually. If you make a contribution, you can deduct the contributions (even if you do not itemize deductions) when completing your federal income tax return.
Contributions to the account must stop once you are enrolled in Medicare. However, you can keep the money in your account and use it to pay for medical expenses tax-free.
You must have coverage under an HSA-qualified high deductible health plan
(HDHP) to open and contribute to an HSA. Generally, this is health insurance that does not cover first dollar medical expenses.
Federal law requires that the health insurance deductible be at least:
- $1,300* -- Self-only coverage
- $2,600* -- Family coverage
In general, the deductible must apply to all medical expenses (including prescriptions) covered by the plan. However, plans can pay for 'preventive care' services on a first-dollar basis (with or without a co-pay). 'Preventive care' can include routine pre-natal and well-child care, child and adult immunizations, annual physicals, etc.
How much can be contributed per year?
You can make a contribution to your HSA each year that you are eligible. You can contribute up to the amount of your HDHP deductible but no more than:
- $3,350* -- Self-only coverage
- $6,650 -- Family coverage
Individuals age 55 and older can also make additional 'catch-up' contributions. The maximum annual catch-up contribution is as follows: 2010 and after -- $1,000
How do I pay my health care expenses with my HSA?
Security National Bank will provide you with a VISA debit card, which provides you instant access to your HSA funds. This card has the ability to be used wherever VISA debit cards are accepted. You also will receive a packet of checks and a special HSA receipt envelope to keep track of expenses.
Contributions made by you, and by family members on your behalf, which do not exceed the maximum annual contribution amount, are deductible by you when determining your adjusted gross income for your federal income tax return. You cannot deduct employer contributions, and these contributions will not count as wages for federal income tax purposes.
When can I make my HSA contributions and is there a deadline for contributions to an HSA for a taxable year?
Regular and catch-up contributions for the taxable year can be made in one or more payments, at the convenience of the individual or the employer, at any time prior to the time prescribed by law (without extensions) for filing the eligible individuals federal income tax for the year, but not before the beginning of that year. The due date for most taxpayers is April 15.
How are distributions from an HSA taxed?
Distributions from your HSA used exclusively to pay qualified medical expenses for you, your spouse, or your dependents are excludable from gross income. Any other distributions not used exclusively to pay qualified medical expenses for you, your spouse, or your dependents are includable in your gross income and are subject to an additional 10 percent tax on the amount includable, except in the case of distributions made after your death, your disability, or your attainment of age 65.
What happens to my HSA in the event of my death?
If your spouse is the beneficiary of your HSA, the HSA becomes his/her HSA. If the beneficiary is not your spouse, the HSA ceases to be an HSA as the date of your death. Security National Bank will distribute the balance of the HSA and report the distribution to the IRS.
*2015 numbers. Adjusted annually.