A Health Savings Account (HSA) is a tax-exempt trust or custodial account established exclusively for the purpose of paying or reimbursing qualified medical expenses of you, your spouse, and your dependents. Contributions to and HSA are tax free. Distributions not used to pay for or reimburse qualified medical expenses roll over are tax free. Distributions not used to pay for qualified medical expenses are subject to a tax penalty of 10%.
If you are eligible, you can establish an HSA in much the same way you would establish an IRA – with a qualified trustee or custodian, such as the Iowa Falls State Bank. If you meet the eligibility requirements, you, your employer, your family members and any other person (including non-individuals) may contribute to your HSA.
Eligibility requirements for HSAs are:
- You must be covered by a health plan with a minimum deductible of $1,050 for individuals or $2,100 for families.
- Your annual out-of-pocket expenses (including deductibles and co-pays) cannot exceed $5,250 for individuals or $10,500 for families.
Just like IRAs, there are contribution, and catch-up limits and deadlines per year.
A Health Savings Account can help you take more control over your health care expenses and save on taxes. An Iowa Falls State Bank Personal Banker would be glad to visit with you, to find out if you are eligible for an HSA.