Health Savings Account
What is a Health Savings Account?
A Health Savings Account (HSA) can be a significant money-saver, especially if you’re a business owner or work for yourself. This tool coordinates with a high-deductible healthcare plan to pay for current health expenses and save tax-free for future qualified medical expenses. Unused funds can remain in your account at the end of a plan year to continue to earn interest. Once you reach age 65, any remaining funds can be withdrawn without tax penalty, similar to an IRA.
Who is eligible for an HSA?
In order to own a HSA, you must be covered by a qualified High Deductible Health Plan (HDHP). An HDHP typically costs less than a traditional policy thus allowing you to invest the cost savings.
- Minimum deductible: $1,500 for individuals; $3,000 for families
- You cannot be enrolled in Medicare, claimed as a dependent on someone else’s tax return or have other ' first dollar ' medical coverage
What are the tax advantages of an HSA?
- Tax deductions when you contribute to your account
- Tax-free earnings on the investment
- Tax-free withdrawals for qualified medical expenses
How do I contribute to my account?
You can make deposits to your account just as you would any other bank account including:
- Deposit in person.
- Transfer from another account.
- Direct deposit through payroll deduction.
- Your employer may also make deposits to your account on your behalf, but tax deductions only apply to your own contributions.
- As with traditional IRAs, you can make prior-year contributions up to the tax year's deadline. For the 2023 tax year, you may contribute $3,850 for a single coverage account or up to $7,750 for a family coverage account. Account owners 55 or older may also be eligible to make $1,000 "catch-up" contributions.
How do I use the funds in my Health Savings Account?
Your HSA will work just like an interest-earning checking account. You will be provided with a debit card, which you may use to make purchases for qualified medical expenses. It is your responsibility to keep records of your expenditures. Any non-medical expenditures could be subject to a tax penalty.
What are the features of the Union Bank HSA?
- Tiered interest-bearing checking account with competitive rates
- Free debit card access
- Monthly statement
- Free inquiry access to Net Express Internet Banking
- No minimum monthly balance
Contact us today to start the account opening process or for more information.