Health Savings Accounts
Healthcare Savings Account
A Healthcare Savings Account (HSA) is designed to help customers save for qualified medical expenses on a tax-free basis.
HSA’s were part of the Medicare legislation that was passed into law by President Bush in December 2003 and went into effect January 1, 2004. Any individual who is covered by a qualified high deductible health insurance plan may establish an HSA.
HSA’s work like an IRA for healthcare. Contributions are tax deductible and interest earned is not taxable if used for qualified medical expenses.
Despite being called a savings account an HSA is technically a checking account that earns interest.
- Free custom checks
- Monthly bank statements
- Proper reporting to the IRS
Quarterly minimum balance maintenance fee as follows:
|$0.00 - $999.99||$3.00|
|$1,000.00 - $2,999.99||$2.00|
For further details and to see if you qualify for an HSA, contact the Cornerstone Bank nearest you.
What is a Health Savings Account?
An HSA is money put in an account owned by an individual to pay for future qualified medical expenses.
How does an HSA work?
An HSA works like an IRA, except the money is used to pay for qualified health care costs. Money deposited to the account is tax deductible and is used to pay for current and future qualified medical expenses. Interest earned is not taxable if used for qualified medical expenses. Unused balances rollover from year to year.
Who can qualify?
Anyone with a high deductible health insurance plan is eligible for an HSA provided they are not covered by another health insurance plan, entitled to Medicare or can’t be claimed as a dependent on someone else’s tax return.
What is a high deductible insurance plan?
|Limits||Minimum Deductible||Maximum Out of Pocket|
What are the tax benefits?
The three major tax benefits are:
- Cash contributions to an HSA are deductible from your federal gross income whether you itemize or not.
- Interest earned is not taxable if used for qualified medical expenses.
- Withdrawals from an HSA for qualified medical expenses are free from federal income tax. Non-medical withdrawals are considered taxable income and are subject to a 20% penalty.
What are the maximum contribution limits?
|Year|| Contribution Limit|
For more information or to set up an HSA account, please contact the new accounts department at any Cornerstone Bank.