Health Savings Account

Do I Qualify?

Eligibility Requirements

• You must be covered by a High Deductible Health Plan (HDHP)
• You can not be enrolled in Medicare
• You can not be claimed as a dependent on another person's tax return
• You can not be covered by any other health insurance that is not an HDHP

Insurance Coverage Exceptions

The following are exceptions, called "permitted insurance" which an individual can have in addition to the HDHP and still qualify for an HSA:

• Specific disease or illness insurance
• Accident, disability, dental care, vision care and long-term care insurance
• Discount card such as a pharmacy card
• Insurance that provides a fixed payment per day (or other period) for hospitalization

HSA Contributions

Contributing to a Health Savings Account is easy – and it comes with some great tax advantages.

Who Can Contribute?

• Employers and employees as long as the account holder meets the requirements for HSA eligibility
• Family members or any other person can make contributions on behalf of an eligible individual

Additionally, contributions are:

• Tax-deductible for the account holder
• Owned by the account holder and remain theirs until the funds are used
• Accepted year-round until the individual's tax deadline (typically April 15)

Contribution Limits

Catch-up contributions for those 55 and older are $1,000.

Spending your HSA

Spending your HSA

Spending the money you’ve accumulated in your HSA is as simple as writing a check or swiping your debit card – but to take full advantage of the benefits, there are some things you should know.

HSA funds are payable on demand. There are no restrictions on when or how you may take distributions. However, to fully recognize the tax advantages, funds must be used for qualified medical expenses.

What Happens To Unused HSA Funds?

• No use it or lose it rules
• All amounts in the HSA are fully vested
• Unspent balances in accounts remain in the account until spent
• Accounts can grow through investment earnings, just like an IRA
• Same investment options and investment limitations as IRA
• Same restrictions on self-dealing as with IRAs

What Happens When I Reach Age 65?

As of age 65, funds can continue to be used for eligible medical expenses tax-free. You may also use the funds for non-eligible expenses and you are only subject to ordinary income tax without any IRS penalty.