A Health Savings Account (HSA) is a personal, tiered, interest-bearing checking account for any adult who has coverage under a High Deductible Health Plan (HDHP) and meets the eligibility requirements listed below. An HSA offers you a better way to pay for qualified medical expenses—such as medical, dental, medications, and hospital costs—while saving for future health care expenses. Decisions about how to spend the money are made by you without relying on a third-party or a health insurer.
If you are an adult with an HDHP who is interested in a self-directed account that provides a better way to save and pay for qualified medical expenses, including earning interest and tax-deductibility, an HSA is the account for you.
Features
- A competitive rate, interest-bearing checking account that earns more interest on higher balances
- Access to your account by check, check card, and online bill payment
- Free 24/7 access to account through Consumers Internet Connect or through Tele-Banking
- Free online bill payment
- Funds in the HSA are used to pay for qualified medical expenses
- You decide when and how much to deposit in the HSA, up to maximum allowed by law
- HSA owner decides which medical expenses to pay
- HSA can remain open even if you change jobs, medical coverage, retire, or become unemployed
- Account balances carry over from year to year
- Convenient automatic deposits from other Consumers accounts
Benefits/Advantages
- Save money for future qualified medical expenses
- Earn interest at a competitive rate
- HSA may provide tax savings:
- tax deductions on contributions to account
- tax-free interest earnings
- tax-free withdrawals for qualified medical expenses
- Balances saved in the account for future health care expenses grow through interest earnings
- There are no “use it or lose it” rules for a HSA
- Make purchases conveniently using check, debit card, cash
Eligibility
- Under age 65
- Have coverage under a High Deductible Health Plan (HDHP)
- Have no other first-dollar medical coverage
- No other coverage through health insurance that is not an HDHP
- Not currently enrolled in Medicare
- Cannot be claimed as a dependent on someone else’s tax return
Terms
- Restricted to individual ownership only
- $50.00 minimum deposit to open
- A $3.00 monthly fee if the average daily balance fall below $500.00
- Interest calculated daily, compounded and paid monthly
- Dollar amounts that can be contributed a HSA for the year:
| Type of HDP | Maximum 2008 | Maximum 2009 |
| Single Coverage | $2,900 | $3,000 |
| Family Coverage | $5,800 | $5,950 |
- Rollovers and transfers are not subject to contribution limits
- Individuals age 55 and over are eligible for an additional “catch-up” contribution. For 2008, the dollar amount is $900. For 2009 and after, the amount is $1,000.
- Any amounts used for purposes other than to pay for “qualified medical expenses” are taxable as income and subject to an additional tax penalty
- The interest rate and annual percentage yield depend upon the applicable rate tier. The interest rate and annual percentage yield for these tiers may change at our discretion
Interest rate tiers are as follows:
< $2,500
$2,501 to $9,999
> $10,000 & over
Other Penalties
Several tax penalties may apply to various HSA transactions, and are in addition to any federal, state or local taxes.
For more information about HSAs for businesses, visit the
Small Business Association at
www.sba.gov/hsa
