What is a Health Savings Account?

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.

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.

An HSA is established by you in much the same way that you establish an IRA with a qualified trustee or custodian.

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.

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

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.

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.

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.

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.

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.

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.

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.