Health Savings Account- HSA

To be eligible for an HSA, you must meet the following requirements:

• You are covered under a high deductible health plan (HDHP) – described below.
• You aren’t enrolled in Medicare.

You can’t be claimed as a dependent on someone else’s tax return.

It’s a plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself (your deductible) before the insurance company starts to pay its share. The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family.

Self-Only Coverage - $3,550
Family Coverage - $7,100

An additional contribution of $1,000 may be made by individuals at least age 55 but younger than age 65 for a total maximum contribution of $8,000 (family) or $4,500 (self-only).

An HSA can be used to pay for your qualified health care expenses on a tax-advantaged basis, helping to reduce your total health care cost. Your unused HSA funds roll over from year to year, so you can also pay for your future qualified health care expenses on a tax-free basis. Because any contributions you make from your paycheck are made before tax is applied, your contributions also save you money by reducing your taxable income.

• The earnings in the HSA are tax deferred, and may be used tax free.
• You decide which medical expenses to pay from the HSA.
• Funds can be saved and used during retirement.
• There is no use-it or lose-it provision, as with a flexible spending plan.
• The HSA is not tied to an employer.
• The HSA increases in value with tax-deferred dividends.
• The HSA funds can be used for qualified medical expenses that are traditionally not covered by insurance. (be sure to check with IRA HSA guidelines for covered expenses).

You can pay with your HSA debit card, send a check to your provider (checks provided upon request) or pay the expense out of pocket and reimburse yourself by withdrawing funds from your HSA.

Generally, qualified expenses include doctor visits, medications, medical equipment, and dental and vision care for you, your spouse and any dependents. Learn more on the IRS website.

• Keep every receipt regarding medical expenses
• Hold onto HSA account statements, purchase receipts, employer contributions and any other documents showing medical expenses.
• The IRS can review returns for up to three years, so hang onto these items for the duration.

We’ll provide you with a Form 1099-SA and Form 5498-SA which you will need to keep in your tax files each year. Simply use the reporting information we provide to complete Form 8889.

Learn more about IRS guidelines for HSAs here.