- About Us
August 14, 2017
President & CEO
Q: What is a HSA?
A: Health Savings Account. It is a tax-deferred savings account to save for immediate or future medical expenses.
Q: What makes a HSA tax-preferred?
A: 1. Health Savings Accounts contributions made by the account owner are not taxed.
Q: Can anyone open a HSA?
A: 1. Due to the tax-preferred status, the IRS specifies that in order to be eligible for a HSA, you must have a High Deductible Health Plan (HDHP).
2. A HDHP has a higher annual deductible than typical health plans and a maximum limit on the sum of the annual deductible and out of pocket expenses. Check with your provider to determine if your plan meets the HDHP criteria.
Q: What are important factors in deciding which HSA to choose?
A: 1. Like many other financial products and accounts, you should pay close attention to the fee structure of the account.
2. Because the IRS limits the amount you can save each year, you want to be certain that your health care funds are preserved for health care and not bank fees.
Q: I wish I could shop for a HSA with lower fees, but my employer makes a contribution to my HSA so they choose what financial institution I must use for my HSA. Do I have any options?
1. Similar to rules for IRA accounts, an individual may have multiple accounts as long as they do not exceed the annual contribution limits. The IRS allows for unlimited transfers between HSA accounts that do not affect contribution limits.
Q: If my employer doesn’t offer a HSA, how can they learn more about this healthcare insurance option?
A: At HFCU, we have consultants that would be happy to talk with the company’s Human Resource representative. They can explain all about the benefits involved and can help to set up an informative meeting with employees to help them understand their options.
Q: Am I allowed to open another HSA at any time or only during open enrollment?
A: You may open a HSA at any time that you meet the IRS guidelines discussed earlier, but assuming you have met those, you may open an additional account at any time.
Q: How do I access funds in my HSA?
A: At HFCU, we offer a variety of HSA payment options:
1. HSA debit card and checks
2. Online banking and mobile app services
Q: Is it true that a HSA is “Use it or Lose it?” meaning that I must spend everything that I save this calendar year or the money is no longer available to me?
A: NO! This is one of the misconceptions of the HSA where it is confused with another type of tax preferred account, the Flexible Spending Account (FSA).
1. With a HSA, YOU are the owner of the account. Once the money is in the account, you have the sole authority over the money.
Q: What are considered qualified medical expenses that allow tax-free withdrawals?
A: 1. The best source for specific information can be found at
IRS.gov website and are the same expenses that would generally qualify for the medical and dental expenses deduction when filing annual tax returns.
Q: Can HSA’s be used to pay for Medicare premiums?
A: This is a question that is best answered by a qualified tax advisor. Generally, though, Medicare and other health care coverage can be treated as qualified medical expenses as long as you are 65 or older.
1. Note: When individuals turn 65 and begin Medicare coverage, they no longer are allowed to contribute into a HSA. This is because you generally cannot have any health coverage other than an HDHP in order to contribute to a HSA.
Q: If I have sole authority over the funds in my HSA, what happens if I use the funds for a non-medical expense?
A: 1. On your annual tax return, you must report the total dollar of HSA deposits and withdrawals for the year and attest that all withdrawals were for qualified medical expenses.
2. Any non-qualified expenses are subject to income tax and an additional 20% tax/penalty.
Q: Can HSA’s be rolled over or transferred?
A: 1. Rollovers and transfers are generally not subject to the annual contribution limits.
2. Individuals must roll over the amount within 60 days after the date of receipt. An individual can make only one rollover contribution to an HSA during a 1-year period.
3. If an individual instructs the financial institution (trustee) of their HSA to transfer funds directly to the trustee of another of their HSA’s, the transfer is not considered a rollover. There is no limit on the number of transfers allowed.
Q: I have heard mention of a HSA as part of the retirement planning process. How does a HSA affect retirement planning?
A: There are two components of the HSA that provide excellent options in retirement planning.
1. First, the funds can be used to pay for COBRA expenses.
2. Secondly, funds in the HSA grow tax-free and can therefore be withdrawn tax-free to cover medical expenses in contrast to other retirement accounts that have taxes due upon withdrawal.
d. For more information regarding this area, a Heritage Financial representative would be happy to discuss it with you. You can reach them at 812- 253-6928 Ext. 2453.