Health Savings Account
A tax-advantaged medical savings account that allows you to take advantage of a High Deductible Health Plan.
A Health Savings Account (HSA) is an account that you can put money into to save for current and future qualified medical expenses. There are advantages to putting money into these accounts, including favourable tax treatment.
Who Can Have an HSA?
Any individual can contribute to an HSA if they are covered under a high deductible health plan (HDHP). To qualify you are generally not covered by any other health plan that is not a HDHP, are not enrolled in Medicare, and are not claimed as a dependent on someone else's tax return in the year contributions are made.
A High Deductible Health Plan is defined as:
You can use your HSA through the following methods:
You will also be able to:
You make all the decisions about:
2012 Annual Contributions -$3100.00 single or $6250.00 family.
Affordability -You should be able to lower your health insurance premiums by switching to health insurance coverage with a higher deductible.
Flexibility -You can use the funds in your account to pay for current medical expenses, including expenses that your insurance may not cover, or save the money in you account for future needs.
Savings -You can save the money in your account for future medical expenses and grow your account through investment earnings.
Ownership -Funds remain in the account from year to year, just like an IRA. There are no use it or lose it rules for HSAs. The account is portable too.
High Deductible Health Plan (HDHP) -A High Deductible Health Plan is generally health insurance that does not cover first dollar medical expenses. You must have coverage under an HSA-qualified HDHP to open and contribute to an HSA. Federal law sets the requirement of the high deductible.
See our rate sheet for current rates on our HSA savings account. Certificates are also available, for a higher yielding investment option. There can be a downside to putting your HSA funds into certificates however. If you have to cash out an HSA certificate early to pay for health care costs you will have an early withdrawal penalty to pay. That is why we recommend that you not have all of your HSA funds in certificates. A good strategy would be to keep an adequate proportion in HSA savings, with the remainder in various certificates maturing at different time periods. This would give you maximum return while lessening the potential for surrendering a certificate early.
Not intended as tax advice. Please consult a tax professional.