Health Savings Accounts

There is a triple tax benefit to an HSA. You can contribute pre-tax dollars, pay no taxes on earnings, and withdraw the money tax-free now or in retirement to pay for qualified medical expenses. This information is not designed, meant, nor does it constitute the rendering of legal or tax advice.

To make the most out of your HSA, contribute the maximum amount allowed, see chart below:

Aim to save up to the amount of your insurance deductible or more to give yourself the chance to pay-off the deductible with tax-fee funds from your HSA and to cover your estimated expenses.

* Taxpayers who are 55 or older may contribute an additional $1,000.

An HDHP is a plan with typically lower premiums but higher deductibles than traditional insurance plans. A deductible is the amount you must pay out-of-pocket before the insurance company will pay for a claim. The premium is the amount of money paid to the insurance company periodically/monthly for the policy.

For 2021, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual (self-only coverage) or $2,800 for a family. Visit this IRS resource for more information.

The money in your HSA is yours to keep for life, even if you switch employers or healthcare plans, or you retire. At the end of each year, any unused funds will continue to roll over for life. In other words, the funds in your HSA aren’t “use it or lose it.”

Although qualified expenses are subject to change annually by the IRS, costs considered to be medically necessary are generally considered as qualified. Expenses that are for elective procedures (such as cosmetic purposes), are not. Withdrawing funds for non-healthcare related reasons (unqualified expenses) may result in penalties. The penalty can be up to 20% of the costs if you’re under 65, and the withdrawal is taxable. Visit this IRS resource for more information.

If you end up not using your HSA funds for medical expenses, you can save your money for retirement. As long as you are 65 years or older, you are allowed to withdraw funds for non-medical expenses. You may still need to pay income tax upon withdrawal, but you may not have to pay additional penalties.

If you have a family plan, you can order a debit card in the name of your spouse or dependent. This provides more options to you and your family members to access your health savings account. To order a card for your spouse or dependent, simiply visit a branch or call Member Services at (800)-552-4745.

Here are some helpful links to give you a better understanding of HSAs and how to make the most of your HSA account.

HSA Savings Calculator

IRS Publication 969

IRS Publication 502

Financial Education Tools