Regardless of your current state of health, life can be unpredictable. Having the resources to avoid financial hardship can be crucial to your well-being. A Health Savings Account (or HSA) allows you to put money away, and take money out, tax-free, to be used toward qualified medical expenses. Not only could you lower your taxable income, you can also cushion yourself from the impact of unexpected medical expenses.
• Opening deposit of $50.00
• No administrative set-up fee; no minimum balance; and no monthly service charge
• Free Online and Mobile Banking
• Free Online Bill Pay
• E-Statements available
• Free Debit Card 1
• No “use it or lost it” rule; funds roll over
• Interest compounding and crediting monthly
• Tiered interest rates 2
(1) Debit card subject to approval. (2) Rates may change at any time.
Health Savings Account (HSA) Frequently Asked Questions
For additional questions, please seek guidance from your tax advisor.
What is a Health Savings Account (“HSA”)?
A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.
You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer.
What Is a “High Deductible Health Plan” (HDHP)?
You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an lower premium health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover.
How can I get a Health Savings Account?
Consumers can sign up for HSAs with banks, credit unions, insurance companies and other approved companies. Your employer may also set up a plan for employees as well.
How much does an HSA cost?
An HSA is not something you purchase; it’s a savings account into which you can deposit money on a tax-preferred basis.
Who is eligible for a Health Savings Account?
To be eligible for a Health Savings Account, an individual must be covered by a HSA-qualified High Deductible Health Plan (HDHP) and must not be covered by other health insurance that is not an HDHP. The individual cannot be claimed as a dependent on someone else’s tax return. Certain types of insurance are not considered “health insurance” (see below) and will not jeopardize your eligibility for an HSA.
Can I get an HSA even if I have other insurance that pays medical bills?
You are only allowed to have automobile, dental, vision, disability and long-term care insurance at the same time as an HDHP. You may also have coverage for a specific disease or illness as long as it pays a specific dollar amount when the policy is triggered. Wellness programs offered by your employer are also permitted if they do not pay significant medical benefits.
Does the HDHP policy have to be in my name to open an HSA?
No, the policy does not have to be in your name (assuming you meet the other eligibility requirements for contributing to an HSA). You can still be eligible for an HSA even if the policy is in your spouse’s name.
I don’t have health insurance, can I get an HSA?
You cannot establish and contribute to an HSA unless you have coverage under a HDHP.
I’m on Medicare, can I have an HSA?
You are not eligible for an HSA after you have enrolled in Medicare. If you had an HSA before you enrolled in Medicare, you can keep it. However, you cannot continue to make contributions to an HSA after you enroll in Medicare.
I am a Veteran, can I have an HSA?
If you have received any health benefits from the Veterans Administration or one of their facilities, including prescription drugs, in the last three months, you are not eligible for an HSA.
My employer offers an FSA, can I have both an FSA and an HSA?
You can have both types of accounts, but only under certain circumstances. General Flexible Spending Arrangements (FSAs) will probably make you ineligible for an HSA. If your employer offers a “limited purpose” (limited to dental, vision or preventive care) or “post-deductible” (pay for medical expenses after the plan deductible is met) FSA, then you can still be eligible for an HSA.
My employer offers an HRA, can I have both an HRA and an HSA?
You can have both types of accounts, but only under certain circumstances. General Health Reimbursement Arrangements (HRAs) will probably make you ineligible for an HSA. If your employer offers a “limited purpose” (limited to dental, vision or preventive care) or “post-deductible” (pay for medical expenses after the plan deductible is met) HRA, then you can still be eligible for an HSA. If your employer contributes to an HRA that can only be used when you retire, you can still be eligible for an HSA.
My spouse has an FSA or HRA through their employer, can I have HSA?
You cannot have an HSA if your spouse’s FSA or HRA can pay for any of your medical expenses before your HDHP deductible is met.
Does my income affect whether I can have an HSA?
There are no income limits that affect HSA eligibility. However, if you do not file a federal income tax return, you may not receive all the tax benefits HSAs offer.
Can I start an HSA for my child?
No, you cannot establish separate accounts for your dependent children, including children who can legally be claimed as a dependent on your tax return.
Do my HSA contributions have to be made in equal amounts each month?
No, you can contribute in a lump sum or in any amounts or frequency you wish. However, your account trustee/custodian (bank, credit union, insurer, etc.) can impose minimum deposit and balance requirements.
Can my employer contribute to my HSA?
Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. If your employer contributes some of the money, you can make up the difference.
Do my contributions provide any tax benefits?
Your personal contributions offer you an “above-the-line” deduction. An “above-the-line” deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.
If my employer contributes to my HSA, does that also provide me any tax benefit?
If your employer makes a contribution to your HSA, the contribution is not taxable to you the employee (excluded from income).
I’m over 55 and would like to make catch-up contributions to my HSA, like I’ve done with my IRA. Is that possible?
Yes, individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year until they enroll in Medicare.
I turned 55 this year. Can I make the full “catch-up” contribution?
If you had HDHP coverage for the full year, you can make the full catch-up contribution regardless of when your 55th birthday falls during the year. If you did not have HDHP coverage for the full year, you must pro-rate your “catch-up” contribution for the number of full months you were “eligible”, i.e., had HDHP coverage. However, if you are covered on December 1, you are treated as an eligible individual for the entire year and get the full contribution.
If both spouses are 55 and older, can both spouses make “catch-up” contributions?
Yes, if both spouses are eligible individuals and both spouses have established an HSA in their own name. If only one spouse has an HSA in their name, only that spouse can make a “catch-up” contribution.
Does tax filing status (joint vs. separate) affect my contribution?
Tax filing status does not affect your contribution.
I’m a single parent with HDHP coverage but have child/relative that can be claimed as a dependent for tax purposes, and this dependent also has non-HDHP coverage. Am I still eligible for an HSA?
Yes, you are still eligible for an HSA. Your dependent’s non-HDHP coverage does not affect your eligibility, even if they are covered by your HDHP. You can contribute up to the statutory limit.
**Fees may reduce earnings.