Health Savings Accounts

What is an HSA? A Health Savings Account (HSA) is a tax-advantaged savings option that allows participants to pay for qualified health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. HSA funds also can be used to pay for non-health expenses on a taxable basis. HSA funds accumulate over time with interest and are tax-free. Account holders own any funds in the account immediately. Moving onto slide 5 now. So what are HSAs? For starters, a Health Savings Account is a tax-advantaged account that must be paired with a high deductible health insurance plan. At the federal level, HSAs have 3 tax advantages: contributions are tax-free or can be made on a pre-tax basis, distributions for eligible medical expenses are tax-free, and interest earned is also tax-free. The easiest way to think of an HSA is as a “medical IRA.” Funds can be spent on medical expenses, or left to roll from year to year and serve as an investment. Unlike a flexible spending account, the funds belong to the accountholder, are portable from job-to-job, and are not subject to any use-it-or-lose-it provisions. 1

Who is eligible? People who are Enrolled in an HSA-compatible health plan which is High Premium High Deductible (HPHD) Enrolled in health insurance other than an HSA-compatible health plan Enrolled in Medicare or Tri-care Eligible to be claimed as a dependent on someone else’s tax return 2 2

How much can I contribute? Annual Limits vary from year to year. The current limit for 2018 is $6,150 for a family and $3,050 for an individual. There is also a catch up contribution amount of $1000 for individuals over age 55 in addition to the above amount. How can I contribute? HSA contributions may be made fro the following sources: Pre-tax payroll deductions Employer contributions Individual contributions IRA transfer Transfer/rollover from another HSA 3 3

HSA-qualified medical expenses Most out-of-pocket healthcare expenses can be paid with an HSA Contact lenses including saline solution and cleaner Dental treatment x-rays, fillings, extractions, etc. Medicines or drugs including OTC medicines 4 4

Triple tax savings* Increase your spending and savings power Pay for qualified medical expenses tax free Interest and investment earnings are tax free Contributions are pre-tax or tax deductible * All taxes are at the federal level. State taxes vary. Please consult a tax advisor. 5 5

You are in charge HSA flexibility FDIC-insured, interest-bearing deposit account Choose how to invest in mutual funds after achieving a minimum deposit account balance One place to manage both your deposit account and investment funds No investment transaction fees INVESTMENT PRODUCTS: NOT FDIC INSURED ● NO BANK GUARANTEE ● MAY LOSE VALUE 6 6

For more information To learn more about HSA legislation and IRS guidelines, go to www.ustreas.gov and select “Health Savings Accounts (HSAs)”