General Information About HSAs
1.
What is a Health Savings Account?
3.
What type of insurance plan is HSA-eligible?
5.
What are qualified medical expenses?
6.
Can I use my HSA to pay my insurance premiums?
8.
Can I open an HSA in one of your branches?
Managing Your HSA
11.
I would like to transfer my HSA to another
financial institution, what do I need to do?
12.
How can I access my account?
13.
Whom do I call for information about my account?
14.
How can I change my beneficiary?
15.
Whom do I call if I have a problem with my debit
card?
16.
What happens to my HSA in the event of my death?
Contributions
17.
What happens if all of the money contributed is
not used?
18.
How much can be contributed each year to an HSA?
19.
Who can contribute to an HSA?
20.
What is the deadline for making contributions for
the year?
Distributions
21.
How are distributions taxed or penalized?
How HSAs Work With Other Accounts
22.
Can I have an HSA if I already have a Flexible
Spending Account (FSA)?
23.
Can I have an HSA and an IRA or other qualified
retirement plan?
A Health Savings Account (HSA) is a deposit account created to help meet rising health care costs by allowing individuals and families with High Deductible Health Plans (HDHP) to deposit pre-tax funds* into an account for qualified medical expenses. After age 65, the account owner can also use the funds for non-medical expenses without incurring tax penalties. The Medicare Reform Act, approved December 2003, authorized this account.
*Deposits made from after-tax income are tax deductible.
The HSA works in conjunction with a special High Deductible Insurance Plan (HDHP) to give you comprehensive health insurance coverage at the lowest possible net cost.
You can use the money in your account to cover the
deductibles on your insurance policy and any other qualified medical expenses
that you may incur as defined under
The policy must be an HDHP with an annual deductible of at least $1,000 for individuals and $2,000 for families. For 2005, your total annual out-of-pocket expenses (money applied to your deductible and your coinsurance for covered charges) must be no more than $5,100 for individuals or $10,200 for families. These amounts are subject to cost-of-living adjustments. If you are unsure whether your health insurance is HSA-eligible, please contact your insurer or tax advisor.
Anyone with a High Deductible Health Plan (HDHP) as his or her primary health insurance plan is eligible to open an HSA. Secondary coverage, such as a spouse's policy, is not permitted when contributing to an HSA.
The only groups not eligible are individuals entitled to Medicare benefits (generally not reached until age 65) or those claimed as a dependent on another person's tax return.
Anyone over the age of 65 who is not enrolled in Medicare can open/contribute to an HSA.
HSAs can be used for many types of medical expenses
as defined in
Qualified medical expenses include:*
- Health insurance plan
deductibles, co-payments and co-insurance
- Prescription and
over-the-counter drugs
- Dental services, including
braces, bridges and crowns
- Vision care, including glasses,
contact lenses and lasik eye surgery
- Psychiatric and certain
psychological treatments
- Long-term care services
- Medically-related transportation
and lodging
Typically, HSAs may not be used to pay health insurance premiums, but there are exceptions made for:
o
Health insurance premiums if you are receiving federal or state
unemployment
o
Premiums for COBRA qualified health insurance
o
Long-term care insurance premiums
o
Premiums for a health plan (other than Medicare supplemental
policy) for an individual age 65 or older
As the account owner, you will be responsible for substantiating that the distribution is for qualified medical expenses and must maintain records sufficient to show it is tax-free.
Please refer to the "Qualified Medical
Expenses" in
Note: An HDHP must already be established before incurring any expenses or they will not qualify.
*Please consult your
Insurance Company, your tax consultant or
No, this would be considered a non-medical withdrawal subject to all taxes and penalties.
The exception to this rule would apply if the money being withdrawn were being used to pay for:
- Qualified long-term care
insurance.
- Health care insurance, including
a major medical plan while you are: a) receiving unemployment compensation
or b) entitled to health care continuation programs such as COBRA.
Funds in these accounts will be held in an account for you by American Bank.
Yes, one of our new accounts representatives will be happy to help you open an HSA with American Bank.
- I would like to transfer my
existing HSA or Archer Medical Savings Account (
If you need any help, please call our new accounts
department at
- How do I reimburse myself for
qualified medical expenses if I pay a medical bill out of my regular
account?
Make an ATM withdrawal* from your HSA account to reimburse yourself for the expense. Remember to keep a record of your expenses to prove that the distribution was made for qualified medical expenses.
*Fees may apply.
If you need any help, please call our new accounts
department at
A Visa® debit card(s) will be issued to you as soon as the account is set up.
Please call
If you have any questions or need help, please call new accounts at (254)799-4921.
If your card is lost, stolen or damaged please call
If your spouse is the beneficiary, then ownership of the account transfers to your spouse. We would close the account and open a new one in his/her name, transferring the balance with no penalty.
If your beneficiary is not your spouse, the HSA will be closed and the balance of the account will be included in the beneficiary's gross income for the year that your death occurred. We will need to re-issue the account in this beneficiaries name and close it for tax reporting purposes.
In either case, the beneficiary would need either
to go into one of the branches or call new accounts at
Please note that a death certificate will be required before any distributions or changes can be made to the account.
The HSA acts like an IRA account; any funds left in the account at the end of the calendar year will remain in the account and earn non-taxable interest to supplement medical expenses at any time in the future. The balance will not affect the amount that may be contributed the next calendar year.
When the account owner reaches age 65, he/she can continue to use funds for qualified medical expenses, or withdraw penalty-free any amount for non-qualified medical expenses. The money withdrawn at that time will need to be claimed as taxable income.
The maximum annual contribution is the amount of
the HDHP deductible, up to $2,650 for individuals or $5,250 for families in
2005, reduced by any contribution to an Archer
Contributions can be made by you, your family members or your employer; this is true whether you are self-employed or unemployed.*
*Please consult a tax advisor.
All regular or catch-up contributions can be made anytime during the tax year up to and including your federal income return due date on April 15th of the following year. Extensions are not included in this time period.
Any distribution from your HSA for qualified medical expenses for you, your spouse or dependents are not taxable.
All other distributions are taxable and subject to an additional 10% tax on the amount withdrawn. Exceptions to this rule include:
- Distributions made after your
death or disability*.
- Distributions made after age 65
for any reason.
Please note that distributions for qualified medical expenses must be incurred only after your HSA has been established.
*This applies only if you are disabled before age 65. The custodian or trustee may request a copy of a certificate from your physician that you meet the definition of disability under IRC Section 72(m)(7).
As a general rule you cannot have both, but there are circumstances that allow the combination of aspects of an FSA with an HSA*. You will need to consult a tax advisor for the specifics on this situation.
*Please consult your tax advisor.
Yes. An HSA does operate under some of the same rules that apply to traditional IRAs, but it is not an IRA. An HSA is simply a savings account plan for medical expenses; it does not have any effect on your ability to contribute to any type of retirement plan.