Health Savings Account

What is an HSA?
Think of an HSA as a savings plan for health care you’ll need today, tomorrow and into the future. It works like a regular bank account, but you don’t pay federal income tax on the money you deposit. When you use your HSA money to pay for qualified medical expenses, you won’t pay income taxes on the money, either. You can even build your savings into a nest egg for retirement.

Unlike a flexible spending account (FSA), your savings grow from year to year. There’s no “use it or lose it” rule. The money is there when you need it. And it’s yours to keep.

Why have an HSA?
An HSA simply helps you plan, save and pay for health care.

You own it.
The money belongs to you, even deposits made by others, such as an employer or family member. You keep it, even if you change jobs or health plans.

It has triple tax benefits.
• Money deposited is federal income tax-free • Savings grow tax-free.
• Withdrawals made for qualified expenses are also incometax free.

Anyone can contribute.
You, your employer, or a loved-one. There are no restrictions on who can put money into your account.

It’s not just for doctor visits.
You can use your HSA to pay for medical needs such as eyeglasses, hearing aids and qualified prescriptions. You can even use your savings to pay for other kinds of health insurance, such as COBRA, long-term care and any health plan coverage you have while receiving unemployment compensation. When you turn 65, you can use HSA savings to pay for any tax deductible health insurance (except for Medicare supplemental insurance).

You can invest it.
Once your balance reaches the investment threshold, you can begin investing in mutual funds. If you earn money on your investments, you don’t pay income tax on that money, either.

You can save for the future.
By saving in an HSA, you can be ready for expenses due to illness or accident. And, after you turn 65 or become entitled to Medicare benefits, you may withdraw money from your HSA for expenses that are not qualified medical expenses which are subject to standard income taxes, without penalty. Save as much as you can now, and you could possibly have a nest egg when you retire.

What else you need to know about an HSA.
Eligibility rules apply. To deposit money into an HSA, you must be enrolled in an HSA- eligible health plan. You are eligible if:
• You are covered under an eligible high deductible health plan (HDHP).
• You are covered by no other health coverage, unless it is permissible coverage like vision or dental.
• You are not enrolled in Medicare.
• You cannot be claimed as a dependent on someone else’s tax return.

Some other restrictions apply. Please consult your tax, benefits or financial advisor. If you switch to a health plan that makes you ineligible to continue depositing money in an HSA, you
may continue to use the money in your account for qualified medical expenses, but you can no longer make deposits.

Contribution limits are determined every year by the IRS.
You can make contributions all the way up to the tax-filing deadline (usually April 15) and still get tax credit for the previous year.