When it comes to saving for medical expenses, we have you covered. If you have a high deductible health insurance plan, you might qualify for a Health Savings Account (HSA). Open a HSA to start saving for qualified medical expenses, tax free.* What is a Health Savings Account?
Quite simply, a HSA is money put into an account owned by an individual to pay for future qualified medical expenses. Who can qualify?
Anyone with a high deductible health insurance plan is eligible for a HSA, provided they are not covered by another health insurance plan, entitled to Medicare, or can't be claimed as a dependent on someone else's tax return. How does a HSA work?
A HSA works like an IRA, except the money is used to pay for qualified health care costs. Money deposited into the account is tax deductible and is used to pay for current and future qualified medical expenses. Interest earned is tax deferred. Contributions to an HSA can be used for qualified medical expenses not covered by the HDHP, which include deductibles and co-pays, and often dental and vision care and medicines as well. Your HSA will provide you with a debit card or checks to access your account. You do not have to use your HSA for medical expenses---you can withdraw funds for any reason, but you will be penalized for doing so.
The best thing about an HSA is that you control it. You decide how much to contribute, and when. You also earn interest on the funds invested, and you determine how and when the funds are spent. Funds in an HSA roll over from year to year, they don't have to be spent in the year they're contributed. They can accumulate to cover future medical expenses. You can use money in your HSA for any family member, not just yourself, and as long as it is used for qualified medical expenses, it is tax-free.
You can withdraw money from your HSA at any time, but if you use it for something other than medical expenses the withdrawal will be taxed, and subject to a 10% penalty. If you are over 65 or disabled, the penalty is waived, but the withdrawal is still taxable. There is a maximum annual contribution to an HSA (refer to the IRS for contribution limits by year), which is adjusted each year for inflation. If you are over 55, you can make additional catch-up contributions.
To learn more about Bank of Commerce Health Savings Accounts contact us
at 307-324-2265 or 800-934-4507.
*All references to tax savings are at a federal level. State taxes vary. Health savings accounts are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRA penalties. State taxes may apply. Consult your tax advisor with questions.
Check out these calculators to determine the possible savings.