Health Savings

A qualified trustee or custodian will determine what you need to do to open an HSA account. This may include completing and processing appropriate paperwork and making a minimum deposit much in the same way an IRA is established.

To be eligible for an HSA, an individual must be covered by an HDHP-qualified high deductible health plan, must not be covered by other health insurance that is not an HDHP, not enrolled in Medicare, and cannot be claimed as a dependent on another person’s tax return.

To be considered a HDHP (and to qualify for opening an HSA), the HDHP must meet minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHP’s as announced by the IRS.

When the eligibility requirements are met to open your HSA, you, your family members, your employer and any other person or non-individual may contribute to your Health Savings Account. This applies if you are employed, self-employed or unemployed.

Your annual HSA contribution cannot exceed the deductible of your HDHP. Additionally, “catch-up” contributions are available for eligible individuals who are age 55 or older by the end of their taxable year and for any months individuals are not enrolled in Medicare.

NOTE: Any transfer from a checking, savings, or other type of deposit account is considered a regular contribution into your HSA and is applied to your maximum annual contribution limit.

Your personal contributions offer you an “above-the-line” deduction. This deduction allows you to reduce your Federal taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by family members and any other person on your behalf with your receiving the benefit of the tax deduction. You cannot deduct contributions made by your employer. However, these employer contributions will not count as wages for Federal income tax purposes.

Contributions to your HSA account can be made at any time for a taxable year. This includes up to your Federal income tax return due date. However, this does not include any extensions.

Any distributions from your HSA that are not used exclusively to pay for qualified medical expenses of you, your spouse, or your dependents are includable in your gross income and are subject to an additional 10% tax of this includable amount, except in the case of distributions made after your death, or your disability, or your becoming 65 years of age. Distributions used to pay exclusively for qualified medical expenses are excludable from your gross income. For specific information on qualified medical expenses, you are encouraged to consult with a tax or legal professional.