Health Savings Accounts
Is a Health Savings Account right for you?
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A Health Savings Account (HSA), is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP).
The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike flexible spending accounts (FSA's), funds roll over and accumulate year to year if not spent.
HSA's are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA's) that are an alternate tax-deductible source of funds paired with either HDHP's or standard health plans.
HSA funds may currently be used to pay for qualified medical expenses at any time without federal tax liability or penalty. Beginning in 2011, OTC (over the counter) medications cannot be paid by HSA funds without a Doctor's prescription.
Withdrawals for non-medical expenses are treated very similarly to those in an IRA in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier.
HSA's were established as part of the Medicare Prescription Drug, Improvement, and Modernization Act which was signed into law in December of 2003.
If your medical coverage is a High Deductible Health Plan, a Health Savings Account may be right for you. Please stop in and see a Personal Banking Specialist for more information, or to set up your Health Savings Account.