Health Savings Accounts (HSAs)

HSAs were designed to help you take more control of your healthcare. With an HSA, you can save money tax-free to pay for almost any medical cost. HSAs are tax-advantaged accounts for consumers who are covered by high deductible health insurance plans.

You can only open an HSA if you are enrolled in a high-deductible health plan (HDHP). An HDHP has a deductible of at least $1,100 for individual plans, and $2,200 for family health plans. You will need to check with your health plan administrator to determine if your health plan is eligible for an HSA.

All of your funds in a HSA are completely tax-free. There are two ways to deposit tax-free savings in an HSA:

• If your employer has a fringe benefits program, you may be able to deposit funds into an HSA directly from your paycheck. The HSA funds go in before income taxes are taken out, so all the money in an HSA is tax-free.
• If your employer doesn’t have a fringe benefits program, you can claim your HSA deposits as a deduction on your next federal tax return. When you withdraw money, you won’t get taxed as long as it pays for a qualified medical expense. With these tax benefits, it’s like the federal government is helping you pay for your health care costs.

You must have:

• A high deductible health plan (HDHP)
• Have no other health plan except what is permitted under Other health coverage
• Are not enrolled in Medicare and you are not a dependent on someone else’s tax return

For complete information regarding HSA eligibility please refer to
IRS Publication 969.

Yes, but if you withdraw funds for non-medical expenses before you turn 65, you have to pay taxes on the money and a 20 percent penalty. If you take money out after you turn 65, you don’t have a penalty, but you must still pay taxes on the money.

Like any health care option, HSAs have advantages and disadvantages. You will need to consider your budget and what health care you’re likely to need in the next year.

If you’re generally healthy and want to save for future health care expenses, an HSA may be an attractive choice. Or if you’re near retirement, an HSA may make sense because the money can be used to offset costs of medical care after retirement.

On the other hand, if you think you might need expensive medical care in the next year and would find it hard to meet a high deductible, an HSA might not be your best option.

Your employer may offer an HSA option or you can start an account on your own through a bank or other financial institution. To qualify, you must be under age 65 and carry a high-deductible health insurance plan. If you have a spouse who uses your insurance as secondary coverage, he or she also must be enrolled in a high-deductible plan.

Your high-deductible health plan must be your only health insurance—you can’t be covered by any other health insurance. However, having dental, vision, disability and long-term care insurance doesn’t disqualify you from having an HSA.

For an individual to be eligible for an HSA, they must:
• be covered under a high deductible health plan.
• not have coverage under another non-HDHP.
• not be enrolled in Medicare, and
• not be claimed as a dependent on another individual’s tax return.

Bank of the Pacific HSAs offer both debit card and check options. This way the customer can pay directly from their account at the point of purchase of medical products or services. Depositing and withdrawing money is easy.

The Bank of the Pacific HSA carries a monthly service charge of $3.00. There is also a charge of $3.00 per month to receive a paper statement. However, this fee will be waived if the customer accepts their statements electronically.