Health Savings Accounts (HSAs) are tax-exempt accounts where funds grow to pay for medical expenses.  Partnered with a High Deductible Health care plan they create an alternative to traditional health insurance.   HSAs allow you to pay for current health expenses and save for future qualified medical expenses on a tax-free basis.  You must be covered by a High deductible Health Plan (HDHP) to be able to take advantage of a Health Savings Account.  A HDHP generally costs less than what traditional health care coverage costs, so the money you save on insurance can therefore be put into the Health Savings Account.

You own and you control the money in your HSA.  Decisions on how to spend the money are made by you without relying on a third party or health insurer.

  • Interest Rate .35% Annual Percentage Yield .35%
  • No monthly fees or per debit fees
  • Withdrawals can be made by check, debit card, transfer, or online bill payment
  • You must maintain a minimum balance of $100.00 in the account each day to obtain the disclosed APY
  • Interest is paid on balances over $100.00 compounded and credited daily using the daily balance method.
  • One-time $25.00 set-up fee
  • Annual maximum contribution limits are determined by the I.R.S.
  • Annual Percentage Yields (APY) and Interest Rates are subject to change at any time.
  • Fees may reduce earnings. Rates are effective 11/1/2021.

Tax advantaged contributions can be made in three ways:

  1. The individual or family can make tax deductible contributions to the HSA even if they do not itemize deductions;
  2. The individual’s employer can make contributions that are not taxed to either the employer or the employee; and
  3. Employers sponsoring cafeteria plans can allow employees to contribute untaxed salary through salary reduction.

IRS Deductible & Out-of-Pocket Limits for 2021 are as follows:

How much can you contribute?

To encourage saving for health expenses after retirement, individuals age 55 and older are allowed to make additional catch-up contributions to their HSAs.  Once an individual enrolls in Medicare they are no longer eligible to contribute to their HSA.   Amounts contributed to an HSA belong to the account holder and are completely portable.  Funds in the account can grow tax-free through investment earnings, just like an IRA.

Funds distributed from the HSA are not taxed if they are used to pay qualified medical expenses.  Unlike amounts in Flexible Spending Accounts that are forfeited if not used by the end of the year, unused funds remain available for use in later years.   When you turn 65, you can use the money for non-eligible medical expenses.  The money is subject to income tax, and there are no IRS penalties.  If you are under the age of 65 and use your money for non-eligible medical expenses, you will be subject to income tax and a 10% tax penalty.

If you are interested in more information or starting a Health Savings Account, please contact a Customer Service Representative at 651-462-7611 and we will be glad to assist you!