How will a Health Savings Account (HSA) benefit me?
- You are in charge of your own funds and you can make your own decision on the medical procedures you want to pay for.
- Your premiums are usually less than most health insurance plans.
- If you don't use the money, you won't lose it.You can save the money for the future.
How does an HSA work?
- An individual enrolls in a qualified High Deductible Health Insurance Plan (HDHP), then a tax deductible HSA may be opened to pay for medical expenses.
- The money deposited is tax deductible and the interest earned is tax free if used for medical purposes.
- Unused balances roll over from year to year and are yours to keep.
Who is eligible for an HSA?
Basically, any individual that -
- Is covered by a qualified High Deductible Health Insurance Plan (HDHP)
- Is not covered by other health insurances
- Is not eligible for Medicare
- Cannot be claimed as a dependent on someone else's tax return
HSA Contribution Rules
- Your annual HSA deposit can never exceed your plan's deductible (except for catch-up contributions).
- The allowable contribution you put into your HSA is a front page, line item deduction on your Federal Tax Return.
- You must have a qualified HDHP to open or make contributions to an HSA.
- The IRS's 2014 and 2015 maximum contribution limits are:
Taxable Year Individual Family 2015 $3,350 $6,750 2016 $3,400 $6,750
Participants age 55 and older are allowed an additional $1,000.00 per year as a catch up contribution.
HSA Distribution Rules
- Simply write a check to pay for any allowable health expenditures.
- Distributions are tax free if used for allowable medical purposes.
- See publication 502 for complete list of allowable expenditures
- Examples - Dental Services, Prescriptions, Nursing Care, Vision Services, etc.
Grand Valley Bank is offering Health Savings Accounts with no set-up fees and $5.00 monthly fee waived if you keep a minimum balance of $750 or an average daily balance of $1000. You'll receive free checks and a monthly statement with images for easy record keeping.