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 favorable tax treatment.
- Tax Advantages
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 (HDHP) is defined as:
Individual Plan minimum annual deductible* of $1,300 and maximum out-of-pocket of $6,450.
Family Plan minimum annual deductible* of $2,600 and maximum out-of-pocket of $12,900.
Individual Plan minimum annual deductible* of $1,300 and maximum out-of-pocket of $6,550.
Family Plan minimum annual deductible* of $2,600 and maximum out-of-pocket of $13,100.
2015 Annual Contributions -$3350.00 single or $6650.00 family.
2016 Annual Contributions -$3350.00 single or $6750.00 family.
There is also a $1000 catch up contribution for taxpayers who are 55 and over
You can use your HSA through the following methods:
- Withdraw funds with your HCU HSA Debit card at any ATM
- Use your HCU HSA Debit card anywhere VISA is accepted, including pharmacies and health care providers
- Make contributions and distributions via HCU Online Banking
- Withdraw funds at branch locations
You will also be able to:
- View your account balance and transaction history in Heartland Credit Union Online Banking.
- Receive quarterly statements via mail or eStatements
You make all the decisions about:
- How much money to put into the account, up to the maximum annual contribution for each year.
- Whether to invest in the HSA savings account or a higher yielding certificate
- Whether to pay current medical expenses or save the account for future expenses
- Which medical expenses to pay from the account.
Security -Your qualified high deductible insurance and HSA protect you against unexpected medical bills.
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.
Contribution Deadlines -The deadline for regular and catch-up contributions is your federal income tax return due date. The due date for most taxpayers is April 15th.
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.
Prohibited Transactions -If you or your beneficiary engage in a prohibited transaction with your HSA, as described in IRC Sec. 4975, your HSA will lose its tax-exempt status and you must include the value of your account in your gross income for that taxable year. Overdrawing your HSA is considered a prohibited transaction.
*Not intended as tax advice. Please consult a tax professional.