Health Savings Account (HSA)
An HSA allows you to take advantage of tax-free earnings while saving funds for medical expenses. This way, when you need medical care, you'll have the money for it. There is no "use it or lose it" policy; the funds are always yours, and always growing until you need them.
- Summary
- $100 minimum balance to open
- $5 opening fee, must be paid in cash
- $25 annual fee
- Free online banking
- Contributions are tax free*
- Interest grows tax free
- Withdrawals are tax free when used for qualified medical expenses**
- Money rolls over year-to-year automatically
- HSA is owned by you, not employer
- Easy withdrawal access by debit card, check, online or in person
*If contributions are made after income was taxed, the amount deposited is tax deductible.
**Withdrawals for non-qualified medical expenses are subject to income tax and a 20% penalty. The 20% penalty is waived for persons 65 and over or who have become disabled.
- Eligibility
- Must be covered under a qualified, high deductible health plan
- Must not have coverage by another type of health plan
- Cannot be claimed as a dependent on another person's tax return
- Cannot be enrolled in Medicare
- Contribution Limits
Contribution limits are set by the IRS. Current 2010 contribution limits are:
- $3,050 for a single person
- $6,150 for a family
- A person age 55 or older may make an additional $1,000 in "catch-up" contributions
