A Health Savings Account is like a personal savings account but the money in it is used to pay for your health care expenses. As a benefit, the money you deposit into your account isn't taxed.
Who can set up a health savings account?
To qualify to open a health savings account (HSA) you must be under the age of 65, carry a high deductible insurance plan and answer 'no' to the following questions:
- Do you have other health coverage (except permitted coverage)?
- Are you enrolled in Medicare?
- Are you claimed as an dependent on another person's tax forms?
What are some basic facts about contributing to an HSA?
- HSA contributions can be made with pre-tax money or after-tax money, which means that contributions are tax deductible.
- Any interest earned on your account is tax free.
- Contributions may be made by you, your employer or members of your family.
- Contributions to an HSA can be lump sum or periodic.
- HSA funds may be rolled over year to year.
How do HSA distributions work?
- Withdrawals to cover you, your spouse or your dependents for any qualified medical expense are tax free.
- Leftover funds that are not used for medical purposes may be used to supplement your retirement savings.
- Non-medical related withdrawals made before the age of 65 are subject to a 10% penalty. After age 65, any non-medical withdrawals will be penalty-free but no longer tax free.
See your Personal Banker for full product disclosure.