What is a Health Savings Account?
A Health Savings Account is an account to help you pay for qualified medical expenses not covered by an insurance plan. It can be funded with your tax-exempt dollars, by your employer, or both. These out-of-pocket expenses include the deductible, coinsurance, and even in some cases, health insurance premiums. You can use your HSA Checking Account to pay for a wider range of medical services than traditional insurance plans typically cover. You own and control the money in your HSA Checking Account. Decisions on how to spend the money are made without relying on a third party or health insurer. These funds can be withdrawn whenever you need them. Unused funds can rollover from year-to-year to pay for future medical expenses or to contribute toward your total investment plan. Use your HSA Checking Account to pay tax-free for:
- Conventional medical expenses like doctor visits, prescription medication, dental, and vision care.
- Treatments not typically covered by insurance such as acupuncture, orthodontics, chiropractic care, and fertility treatments.
- Visit the IRS website for more information on HSAs, including a detailed list of qualifying medical expenses.
You are eligible for an HSA1 if you are:
- Covered by an High Deductible Health Plan (HDHP) that does not have co-payments;
- Not covered under another medical plan that is not an HDHP;
- Not enrolled in Medicare;
- Not eligible to be claimed on another person’s tax return
Effective January 1, 2011, significant changes went into affect that impacted HSAs. These changes are a result of the Health Care Reform, also known as Patient Protection and Affordable Care Act. Visit the IRS website for complete details, however, two of the most significant changes are:
- Over-the-counter medication cannot be purchased with HSA funds without a doctor’s prescription.
- HSA funds used to pay for non-medical purposes will be assessed a 20% tax penalty for the entire withdrawal.
What is a High Deductible Health Plan?
A High Deductible Health Plan is an alternative form of health insurance where plan holders pay lower premiums in exchange for a higher deductible. Current limits are found in the chart below.
|Type of Coverage||Minimum Annual Deductible||Maximum Annual Out-of-Pocket
Private / Exchange
|2015: $6,450 (Private) / $6,600 (Exchange)
2016: $6,550 (Private) / $6,850 (Exchange)
|2015: $12,900 (Private) / $13,200 (Exchange)
2016: $13,100 (Private) / $13,700 (Exchange)
Avoid a Tax Penalty
It’s up to you to monitor your HSA contributions and make sure they don’t exceed your legal limit. Make sure you know what your limit is and closely monitor it. Balancing your checkbook monthly should to be enough to make sure you stay on target. Individuals age 55 and older can also make additional catch up contributions of $1,000 per year. After age 65, you can withdraw money from your HSA Checking Account for any reason without tax penalties. For more information on HSA’s see:
- HSA Calculators
- IRS website
2015 & 2016 Contribution Limits
|Plan Coverage||Maximum Annual Contribution|
Additional Options Through HVFCU Financial Services
Over time, the unused savings in your HSA Checking Account can grow substantially, and can be used to contribute toward your total retirement plan. HVFCU Financial Services can help you customize a plan that addresses your need for tax advantaged savings, more income, and investment growth. Experienced Financial Consultants are conveniently located in all branches. Schedule a free, no-obligation consultation with an HVFCU Financial Services Consultant or call 845.463.3366 to make an appointment.
If you’re eligible for an HDHP you can open an HSA Checking Account.
You can open your HSA Checking Account at any HVFCU branch or use your HSA Checking Account to establish membership. A beneficiary is required when opening your account, and you will need your beneficiary’s Social Security Number at the time of account opening.
To determine your maximum annual contribution allowance for your HSA Checking Account, you will need the information:
- Medicare Filing Date (if applicable)
- Full Disability Filing Date (if applicable)
- HDHP Plan Type (single/family)
- Family Annual (umbrella Deductible)
- Family Member Individual Annual (embedded) Deductible
- Individual Annual Deductible
- Number of Family Members Covered (if embedded deductible)
- HDHP Policy Start Date
The list above is designed to be used in determining the amount you may be allowed to contribute to an HSA account, if you are eligible. Eligibility to open an HSA is based on several factors and HVFCU cannot determine if you meet the eligibility requirements set forth by the IRS. If you need assistance determining eligibility to open and contribute to an HSA, please consult your tax advisor.
HSA Checking Account Benefits
- Triple Tax Savings – Your HSA contributions, withdrawals for qualified medical expenses, and asset growth are all tax free
- If you are 55 years of age or older, you can contribute an additional $1,000
- Flexibility – Use it to pay for services not covered by traditional health insurance
- Control – There’s no need for pre-authorization of services, unless explicitly stated by your HDHP
- Portability – The money in your HSA is yours to keep, even if you switch employers
- Savings – Balances accumulate from year-to-year, contributing to your overall investment plan
- No minimum balance requirement
- Free HSA Visa Debit Card
- No monthly service charge or per check fees
- First box of checks are free
- No fees for deposits or other routine transactions
- Access to your account through free Internet Banking, Mobile Banking, Bill Pay, and eStatements
- Direct deposit of pension, or other recurring checks (For direct deposit of payroll, check with your employer)
- Ability to receive checking account activity notifications via email or text through CUAlerts
- Insured to at least $250,000 by the National Credit Union Share Insurance Fund. Use the NCUA Electronic Share Insurance Calculator to calculate your insurance coverage
- Unlike Flexible Spending Accounts, unused HSA funds can rollover from year-to-year, allowing you to save for future medical expense
Flexible Spending Arrangement (FSA)
A health Flexible Spending Arrangement (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. No employment or federal income taxes are deducted from your contribution. For information on the interaction between a health FSA and an HSA, visit the IRS website.
HSA Visa Check Card
Your Hudson Valley Federal Credit Union HSA Visa Check Card is the perfect companion to your HSA Checking Account because of the versatility and convenience it offers. Use your card instead of cash or checks to pay for qualifying medical expenses at merchants that accept Visa.
Verified by Visa
Shop with confidence online when you enroll your HSA Visa Check Card in the Verified by Visa program. This additional level of protection verifies account ownership at the time you make online purchases through the use of a secure password. Verified by Visa authenticates your information and sends the online merchant a confirmation that your identity has been verified. This ensures that only you can use your card online at participating stores.
- Verified by Visa is a free service. Register your HVFCU HSA Visa Check Card online at the Verified by Visa website.
- If at any time you forget your Verified by Visa password, call 800.857.3118 for assistance.
1 Verify with your insurance provider.