Health Savings Account
Health Savings Accounts (HSA) were designed to help individuals/families defer the out of pocket expense when they are covered by a High Deductible Health Plan (HDHP). An HDHP is defined as having a higher annual deductible than typical health plans, and a maximum limit on the sum of the annual deductible and out-of-pocket expenses. Out-of-pocket expenses include co-payments and other amounts, but do not include premiums. HSA accounts offer tax benefits for contributions and distribution (when used for qualified expenses).
In order to qualify for this type of account there are requirements that have been set by the Internal Revenue Service. A customer must meet all four of the follow qualifications:
- Have a high deductible health plan on the first day of the month
- Have no other health coverage
- Not enrolled in Medicare
- Cannot be claimed as a dependent on someone else's tax return
HSA Accounts receive tax benefits, such as contributions, whether completed by you the customer and/or your employer in turn lowering your taxable income and distribution that are used for qualifying expenses are tax free. Consult with a tax professional for guidance regarding tax implications.
Because your employer and you can both make contributions to your HSA it is imperative to remember your contribution limit in order to avoid penalties for having an "excess contribution".
2017 HSA Contribution limits are as follows:
Self only: $3,400 - over 55 $4,400
Family: $6,750 - Over 55 $7,750
Subject to cost-of-living adjustments (COLAs).
Catch-up Contribution amount $1,000 (Catch-up contribution are offered to those that are age 55 or older)
Note: contributions limits are set by IRS and are subject to change.
Financial Institution's Responsibility
As the trustee of the HSA accounts our responsibilities are much like that of the Individual Retirement Accounts. Fidelity Bank is not responsible for determining an HSA owner's eligibility, nor is it responsible for determining whether an HSA owner's distribution is for a qualified medical expense.
An HSA owner, with the assistance of his insurance company and tax/legal professional, are responsible for making all determinations relating to this type of account.
HSA are individual accounts and may not be jointly owned. However, you are permitted to have an authorized signer, such as your spouse. Just like any account you may designate a beneficiary and the account transfers to the beneficiary. If the beneficiary is your spouse, the ownership automatically transfers to the spouse. If you name someone other than your spouse, the account ceases to be an HSA Account (an authorized signer's rights cease upon the owners death and does not transfer to their ownership).