Health Savings Accounts
What is a Health Savings Account (HSA)?
A Health Savings Account (HSA) is an account you can deposit money into and use to pay for current health expenses. This also allows you to save for future qualified medical expenses on a tax-free basis. An HSA is not a “use it or lose it” plan; the funds in your account roll over year after year. To open a Health Savings Account you must be covered under a High Deductible Health Plan.
What is a “High Deductible Health Plan” (HDHP)?
A HDHP is an inexpensive 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. Your HSA is available to help you pay for the expenses your plan does not cover. To see if your health plan qualifies please contact your health insurance agent.
Who Can Have an HSA?
Any adult can contribute to a Health Savings Account 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 care insurance are permitted).
- Are not enrolled in Medicare.
- Cannot be claimed as a dependent on someone else’s tax return.
Advantages of HSAs
Security: High deductible insurance and HSAs can protect against high or 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 your insurance may not cover, or save the money in your account for future needs.
Control: You make the decisions about:
- How much money to put into the account
- Whether to save the account for future expenses or pay current medical expenses
- Which medical expenses to pay from the account
Portability: Accounts are completely portable, meaning you can keep your HSA even if you:
- Change jobs
- Change your medical coverage
- Become unemployed
- Move to another state
- Change your marital status
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.
Tax Savings: An HSA provides you triple tax savings:
- Tax deductions when you contribute to your account
- Tax-free earnings
- Tax-free withdrawals for qualified medical expenses
You can make contributions to your HSA each year you are eligible.
For 2018, you can contribute up to:
$3,450 – Self-only coverage*
$6,900 – Family coverage*
$1,000 – Additional catch-up contribution amount for individuals 55 and ove
For 2019, you can contribute up to:
$3,500 – Self-only coverage*
$7,000 – Family coverage*
$1,000 – Additional catch-up contribution amount for individuals 55 and over
* Individuals who are eligible individuals on the first day of the last month of the taxable year (December for most taxpayers) are allowed the full annual contribution (plus catch-up contribution, if 55 or older by year-end), regardless of the number of months the individual was an eligible individual in the year. For individuals who are no longer eligible individuals on that date, both the HSA contribution and catch up contribution apply pro rata based on the number of months of the year a taxpayer is an eligible individual.
Contributions can be made as late as your tax-filing due date of the following year.
Contributions to your HSA can be made by you, your employer, or both, however, the total contributions are limited annually.
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 qualified medical expenses tax-free.
Using Your HSA
You can use the money in the account to pay for any “qualified medical expense” permitted under federal tax law. This includes most medical care and services, dental, and vision care.
You can use the money in the account to pay for medical expenses for yourself, your spouse, or your dependent children. You can pay for expenses of your spouse and dependent children even if they are not covered by your HDHP.
**Monthly account statements
**First set of checks (25 count)
|Annual Fee||$25.00--This fee will be waived for accounts with prior year average ledger balances of $5,000 or greater.|
|Deposited item which is returned unpaid to us||$10.00|
|Overdraft/NSF||Contact the bank for the current Fee Schedule.|
Please contact The Gerber State Bank today at 217-795-2331 to see about setting up your HSA!
We look forward to hearing from you.