Americana Community Bank now offers an innovative option to help you manage your health care spending.
By simply combining a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), you can pay for your current health care expenses on a tax-free basis while saving for future medical costs. Now is the time to take advantage of this smart way to enjoy unique tax benefits and reasonable premiums while staying protected.
Benefits of a Health Savings Account
A Health Savings Account (HSA) is an account from which you can withdraw money tax-free for medical care. The benefits are many. With an HSA, the account is yours. You, your employer and other qualified individuals can contribute to your HSA. Contributions are tax-deductible and withdrawals for qualified health services are tax-free. Additionally, your HSA accrues interest to help your account balance grow. You can also use the funds for non-health related expenses, although these are subject to tax rules and penalties. Best of all, "use it or lose it" doesn't apply. Your money rolls over year after year and is yours to accumulate for future health-related expenses. You can even take it with you if you change jobs or retire.
How to Participate in an HSA
Participating is easy. To be eligible for an HSA, you must be covered by a High Deductible Health Plan (HDHP). An HDHP is an insurance policy or self-funded plan that generally costs less than traditional health care coverage so the money you save can be put into an HSA. In both, 2015 and 2016, a minimum annual deductible of $1,300 is required for self-only coverage or a minimum annual deductible of $2,600 is required for family coverage. The maximum out-of-pocket for in-network expenses cannot exceed $6,450 in 2015 and $6,550 in 2016 for an individual or $12,900 in 2015 and $13,100 in 2016 with family coverage. Additionally, you cannot be claimed as a dependent on someone else's tax return, must not be eligible for Medicare and must not have received VA medical benefits at any time over the last three months.
How to make contributions
Make contributions just like you would deposit into any other bank account: via payroll deductions, Internet banking, bank by mail or in person. If you participate in an employer sponsored plan, your employer can make contributions that are not taxed to either you or their company. Your employer may even provide a payroll deduction option in which they will deduct a set amount from your paycheck.
How much can I contribute?
You can contribute to your account by making a lump sum contribution or periodic payments at any time, in any amount, up to the annual maximum limits of $3,350 in both 2015 and 2016 for single coverage or $6,650 in 2015 and $6,750 in 2016 for family coverage. You have until April 15 of the following year to make HSA contributions for the prior year. Additional catch-up contributions ($1,000 annually) can be made if you are over age 55 and not enrolled in Medicare. Funds in your HSA account can be used tax-free for qualified medical expenses. Unused funds accumulate, tax-free, until after age 65, when you can withdraw the funds for any purpose and, if the purpose is not qualified medical expenses, pay standard income taxes.
How do I use my HSA?
Using your HSA is simple. You are able to receive checks or a debit card when you enroll. Simply present your HSA debit card or write a check to your healthcare provider and the money will be deducted directly from your HSA.
It's also easy to manage your account balance. Your account information is available 24 hours a day through our online banking or by calling Americana Community Bank's 24 hour tele-banking phone service at 800-622-2615. ACB customer service representatives are also available to assist you during banking hours.
From routine physicals to prescription drugs, the money in your HSA can pay for a variety of health care-related expenses. As long as you are paying for eligible medical expenses, your HSA money is tax-free. If you are under age 65 and use your money for non-eligible expenses, you may be subject to income tax and a 20% tax penalty. There is no penalty if you are disabled or age 65 or older. The Internal Revenue Service requires that you keep records showing that the funds were used to pay qualified medical expenses.
Frequently Asked Questions
What is an eligible medical expense?
A qualified medical expense is one primarily for the prevention or alleviation of a physical or mental defect or illness. This is typically a service covered by your insurance plan, such as office visits and hospitalization. These also include prescription drugs, medical plan deductibles and co-pays, vision expenses including eyeglasses and contact lenses, as well as non-cosmetic dental expenses. To view the most recent government definition of eligible medical expenses, go to www.treas.gov.
Are medical insurance premiums considered eligible?
You cannot typically use your HSA to pay premiums for health insurance coverage. Some exceptions apply including COBRA, long-term care or premium payments that allow you to have health coverage while receiving unemployment compensation.
What do I do if I use my HSA to pay for something other than an eligible medical expense?
When you file your taxes, the IRS requires that you include the amount in your gross income. The amount is considered regular income and may be subject to a 20% excise tax if you are under 65.
Tell me more about Americana Community Bank's HSA Account:
Here are some details:
Minimum Deposit to Open the Account: $0
HSA Duplicate Checks at no cost to you
Debit Card available
Low Monthly Service Charge: $3.00
Termination Fee upon Closing the Account: $35.00