Health Savings Accounts

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 George W. 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.

 

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.

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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
  • VISA CheckCard available for this account

Minimum Daily Balance

Quarterly Fee

$0.00 - $999.99

$4.00

$1,000.00 - $2,999.99

$3.00

Over $3,000.00

$2.00

For further details and to see if you qualify for an HSA, contact the Cornerstone Bank nearest you.

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?

2018 Spending Limits

Type of account

Minimum Deductible

Maximum Out of Pocket

Single

$1,350.00

$6,650.00

Family

$2,700.00

$13,300.00

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?

Maximum Contribution Limits

Year 

Contribution Limit Individual Plan

Contribution Limit Family Plan

Age 55+
Catch-Up

2018

$3,450.00

$6,900.00

$1,000.00

Get Started

For more information or to set up an HSA account, please contact the new accounts department at any Cornerstone Bank.

 

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