What is a Health Savings Account?
A Health Savings Account (HSA) is a special tax-exempt account established to pay or reimburse the qualified medical expenses of the account owner, his or her spouse and/or his or her dependents. Contributions to an HSA are tax deductible, the earnings grow tax deferred, and distributions to pay or reimburse qualified medical expenses are tax free.Unlike a flexible spending account (FSA), contributions are not lost if they are not spent in the same calendar year. One can spend the funds in an HSA for non-medical expenses but there is a 10% penalty for those under 65 and income tax will be owed on the amount spent. If the person is over 65, the 10% penalty no longer applies.
Am I eligible for an HSA?
You are eligible if you have a qualifying high deductible health plan (HDHP) and answer “No” to each of the following questions:
- Do you have other health coverage (except permitted coverage)?
- Are you enrolled in Medicare?
- Are you claimed as a dependent on another person’s tax return?
Who can contribute to an HSA?
If you meet the eligibility requirements for an HSA, you, your employer, your family members, and any other person (including non-individuals), may contribute.
How much can be contributed to an HSA?
The contribution limit for 2018:
- $3,450 for self- only coverage
- $6,850 for family coverage
Contributions made before April 15th can be applied to the 2017 tax year. Also, account owners 55 years of age or older may qualify to contribute an additional $1,000 per year.
For more information on how to apply for a Health Savings Account, stop by one of our branches, contact us online or call (816) 781-4500.