Personal Banking / Health Savings Account (HSA)
What is a Health Savings Account?
A Health Savings Account (HSA) is a tax-exempt trust or custodial account, used in conjunction with a high-deductible health plan (HDHP), established exclusively for the purpose of paying or reimbursing qualified medical expenses for you, your spouse, and your dependents.
Features of Centier's HSA
- No opening or annual fees
- Free HSA Debit Card
- No monthly service charge with E-Statements; otherwise a $2 monthly service charge
- Funds will earn competitive interest based on tiered balances
- Monthly account statements
- View your account balance online
- No minimum balance
ALSO AVAILABLE:
Mutual Funds**
Non-deposit investment products such as Mutual Funds that may be held in the HSA are not FDIC insured; are not bank issued or guaranteed; and may lose value.
How Much Can I Contribute To My HSA?
If you were considered an eligible individual for the entire year and did not change your type of coverage, you can contribute up to the following limits:
| 2015 HSA Contribution Limits | 2016 HSA Contribution Limits |
|---|---|
| Self-Only Coverage: Up to $3,350 | Self-Only Coverage: up to $3,350 |
| Family Coverage: Up to $6,650 | Family Coverage: up to $6,750 |
An HSA owner may take a one time (once-in-a-lifetime) tax-free distribution from his or her IRA, and transfer that amount to an HSA. The provision does not apply to SEPs or to SIMPLE retirement accounts.
CATCH-UP CONTRIBUTION LIMIT
Additionally, a "catch-up" contribution is available for eligible individuals who are age 55 or older by the end of their taxable year and have not enrolled in Medicare. The catch-up contribution limit is $1,000.
Expenses
| 2015 HDHP Minimum Annual Deductibles | 2016 HDHP Minimum Annual Deductibles |
|---|---|
| Self-Only Coverage: $1,300 | Self-Only Coverage: $1,300 |
| Family Coverage: $2,600 | Family Coverage: $2,600 |
| 2015 HDHP Max Out-Of-Pocket Expense | 2016 HDHP Max Out-Of-Pocket Expense |
|---|---|
| Self-Only Coverage: No more than $6,450 | Self-Only Coverage: No more than $6,550 |
| Family Coverage: No more than $12,900 | Family Coverage: No more than $13,100 |
Understanding Health Savings Accounts
Am I eligible for an HSA?
You are eligible to make or receive an HSA regular contribution if, with respect to any month, you: Are covered under a high-deductible health plan (HDHP) on the first day of the month; Are not also covered by any other health plan that is not an HDHP (with certain exceptions for plans providing preventive care and limited types of permitted insurance and permitted coverage);
Are not enrolled in Medicare; and cannot be claimed as a dependent on another person's tax return.
Are there other requirements for the HDHP?
Yes. For HSA purposes, the high-deductible health plan (HDHP) must limit out-of-pocket expenses. The maximum out-of pocket expenses include money applied to your deductible and your coinsurance for covered charges. These limits do not apply to deductibles and expenses for out-of-network services.
How is an HSA established?
An HSA is established by you in much the same way that you establish an IRA with a qualified trustee or custodian.
Who can contribute to my 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 to your HSA. This is true whether you are self-employed or unemployed.
Maximum annual contributions
If you were not an eligible individual for the entire year, the maximum contribution is prorated for the number of months in which your qualified plan was in force. However, to be eligible for the full year, the HSA owner must remain HSA eligible through a 13-month "testing period" of December 1st of the current year through December 31st of the following year. Any extra contributions over the prorated amount will be subject to tax, including an additional 10% IRS tax penalty
When is the contribution deadline for funding an HSA?
Regular and catch-up HSA contributions can be made at any time for a taxable year up to and including your federal income tax return due date, excluding extensions, for that taxable year. The due date for most taxpayers is April 15.
How do I use my funds?
Write a check or use your HSA debit card to pay for qualified medical expenses to your health services provider. You may also make a direct withdrawal of funds from your local Centier branch, or by internet or mobile transfer. When conducting internet and mobile transfers, it is important to remember that all credits and debits add to current year contributions and distributions. It is very important to save your receipts and statements. You will need them to complete your annual tax return.
What happens to my funds if I do not use them within the year?
An HSA is not a "use it or lose it" account. Your funds will not expire if you do not use them within the year. Funds in your HSA rollover into the next calendar year when there is a balance.
What are the federal tax benefits of an HSA?
Contributions to an HSA are generally fully deductible, the earnings grow tax deferred, and distributions for qualified medical expenses are tax-free. Consult with your tax or legal professional for guidance.
How do I claim the federal tax?
Contributions made by you, your family members, and any other person on your behalf, which do not exceed the maximum annual contribution amount, are deductible by you when determining your adjusted gross income for your federal income tax return (reportable on IRS Form 8889). You cannot deduct employer contributions, and these contributions will not count as wages for federal income tax purposes.
How are HSA distributions taxed?
Distributions from your HSA used exclusively to pay for qualified medical expenses for you, your spouse, or your dependents are excludable from your gross income. Any other distributions are includable in your gross income and are subject to an additional 20 percent penalty tax on the amount includable, except in the case of distributions made after your death, your disability, or your attainment of age 65. HSA distributions that are not rolled over will be taxed as income in the year distributed, unless they are used for qualified medical expenses. HSA custodians/trustees are not required to determine whether HSA distributions are used for qualified medical expenses. Any qualified medical expenses must be incurred only after the HSA has been established.
What happens to my HSA in the event of my death?
Spouse Beneficiary
If your spouse is the beneficiary of your HSA, the HSA becomes his/her HSA.
Nonspouse Beneficiary
If your beneficiary is not your spouse, the HSA ceases to be an HSA as of the date of your death. If your beneficiary is your estate, the fair market value of the HSA as of the date of your death is taxable on your final return. For other beneficiaries, the fair market value of your HSA is taxable to that person in the tax year that includes such date.