Health Savings Account

Health Savings Account (HSA) is a tax advantaged medical savings account that is owned by the individual where contributions to the account are used to pay for current and future medical expenses. The member must be in an eligible High Deductible Health Plan (HDHP).

The money contributed to the account is not subject to federal tax at the time of deposit, so it's pre-tax dollars for employees or tax deductible if you are self-employed. The funds in a Health Savings Account can be used to pay all eligible medical related expenses that are not covered by your Health Insurance Plan.

KEY FEATURES AND BENEFITS

Features Benefits*

Minimum qualifying deductible needed on the High Deductible Plan

  • $1,300 (self-only coverage)
  • $2,600 (family coverage)
  • These amounts are indexed annually for inflation.

Triple tax advantage:

  • Pre-tax contributions
  • Tax-exempt interest and investment gains
  • Tax-free withdrawals for qualified medical expenses

Maximum annual out-of-pocket expense, including deductibles, and co-pays

  • $6,550 (self-only coverage)
  • $13,100 (family coverage)
  • These amounts are indexed annually for inflation.

Plan for the future:

  • New retirement account-withdrawal at age 65 without penalty
  • No “use it or lose it” provision
  • Pay for COBRA and long term care
  • Portable
  • New retirement benefit

Contribution Limits

  • Individual HSA Plan: $3,400
  • Family HSA Plan: $6,750

If the owner of the Family HSA plan is 55 or older, the catch-up provision allows an additional $1,000 for a total contribution of $7,750.

Any money in the HSA that is not used during a calendar year is rolled over to the following year and the account balance can grow over time. This is one of the primary benefits of an HSA.

ADDITIONAL INFORMATION

  • No monthly service fee
  • A Health Savings Account allows members to save and pay for their health expenses on a tax-free basis
  • HSA funds can be withdrawn to pay for “qualified medical expenses”, including dental and vision needs
  • Spouses can establish their own HSA, if eligible
  • Member cannot be covered by other health insurance
  • Member cannot be enrolled in Medicare
  • Member cannot be claimed as a dependent on someone else’s tax return
  • Children cannot establish their own HSA
  • Shares cannot be pledged
  • If you are under age 65, withdraw dollars from your HSA and do not use them for qualified medical expenses, they will be taxed as ordinary income and you will also incur a 20 percent penalty.

Health Savings Account Qualified Expenses

The Health Savings Account can be used to pay for a wide range of medical and health related services. When you incur a medical or health related expense that is not covered by your insurance, there is a good chance that you can pay for it out of your HSA.

The IRS defines qualified expenses as: "Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.

Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Medical expenses include all out of pocket expenses for medical care and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and can include insurance premiums (COBRA) if you are unemployed." Source: IRS.Gov

We’re happy to assist! Please call (909) 986-4552 or (626) 968-9329 and select option 2 to speak to one of our Member Services Representatives, or visit any of our branch offices.

*Chaffey Federal Credit Union is not a financial planning institution or tax advisor, and all information has been obtained from sources believed by Chaffey FCU to be accurate and reliable. Please consult your financial planner regarding investment options and your tax advisor for specific tax advice.