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 self-employed. This tax-free savings tool coordinates with a high-deductible healthcare plan to allow payment for current health expenses while saving for future qualified medical expenses. Any unused funds at the end of the plan year may stay in the account and 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 Once you reach age 65, any remaining funds can be withdrawn without tax penalty, similar to an IRA.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), which typically costs less than a traditional policy, thus allowing you to invest the cost savings.
- Minimum deductible: $1,400 for individuals; $2,800 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 in-person, transfer from another account or direct deposit through payroll deduction. Your employer may even make deposits to your account on your behalf, but you may only use a tax deduction on your own contributions. As with traditional IRAs, you can make prior-year contributions up to the tax year's deadline. For the 2022 tax year, you may contribute $3,650 for a single coverage account or up to $7,300 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 get a debit card 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 Health Savings account?
- 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.