Health Savings Accounts
What is a Health Savings Account (HSA)?
A product of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, HSA’s became available in January 2004. HSA’s are designed to cover medical expenses incurred by the HSA account owner and his or her dependents. HSA contributions are tax deductible and, if amounts are used for qualified medical expenses, distributions of contributions and earnings are tax-free.
Individuals who meet the following criteria may open an HSA:
- Must be covered under a qualified High Deductible Health Plan (HDHP).
- Not covered by another health plan that is not a HDHP.
- Not enrolled for Medicare benefits.
- Not eligible to be claimed as a dependent on another individual’s tax return.
Terms/limits of a qualified HDHP for 2014:
- Annual deductible not less than $1,250.
- Total annual out of pocket expenses do not exceed $6,350.
Family coverage is defined as any coverage other than self-only coverage. Further, family coverage is a health plan covering one HSA-eligible individual and at least one other individual whether or not the other individual is an HSA-eligible individual.
- Annual deductible not less than $2,500.
- Total annual out of pocket expenses do not exceed $12,700.
Note: Each year these amounts will be indexed for cost-of-living adjustments and, as a result, are subject to change.
- $3,300 Single
- $6,550 Family
In addition, catch up contributions up to $1,000 can be made by individuals age 55 or older.
What are the benefits of an HSA?
- Save on Federal income taxes. The contributions you make are deductible,on the HSA maximum contribution (including age 55 catch-up contribution), when determining your adjusted gross income. Account balances grow tax-free.
- Cover deductibles and qualified out-of-pocket expenses. Account balances can be used to pay for any qualified medical expense incurred after the HSA is opened. Withdrawals used to pay for qualified medical expenses are tax-free.
- Take control. `You determine which qualified expenses will be paid from your HSA, how they will be paid and when.
- Benefit from no “use it or lose it” restrictions. Unlike Flexible Spending Accounts, unused balances can be carried over from year-to-year and continue to grow on a tax-free basis.
- Use HSA dollars to pay COBRA premiums. Preserve your liquidity between jobs or during times of unemployment. Special tax-free withdrawals permitted.
- Purchase long-term care insurance. Use the tax-deferred dollars in your HSA to plan for long-term needs.
- Supplement retirement income. Once you enroll in Medicare, you may use HSA balances to pay for out-of-pocket Medicare expenses tax-free, or choose to use HSA balances for non-medical purposes by claiming the amount of the withdrawal as income for tax purposes, penalty-free.
Why Choose American Bank for your HSA?
- It’s easy to open. Just visit any of American Bank’s five offices and speak to a customer service representative.
- It’s easy to use. The American Bank HSA works like a checking account. Money can be deposited into the account at any time and easily withdrawn for qualified medical expenses when needed. The customer can use an American Bank HSA Debit Card, American Bank’s Online Banking with Bill Payment or personalized HSA checks to make payments for qualified medical expenses.
- It’s easy to watch your money grow. American Bank’s Online Banking with free Bill Payment allows customers to review balance and transactions conveniently, make account transfers and easily track spending and pay bills.
- It’s easy to save money. American Bank offers competitive interest rates that enable tax-free balances to grow.
The American Bank HSA NOW Account
No minimum deposit is required to open the account. A minimum balance fee of $3.00 will be imposed each statement period if the daily ledger balance falls below $500 any day of the statement period. No minimum balance fee will be imposed if a direct deposit is credited at least monthly.
The interest rate and annual percentage yield may change at the discretion of the bank at any time.
- Balance Computation Method: The daily balance method to calculate interest will be utilized. This method applies a daily periodic rate to the collected balance in the account each day.
- Compounding and Crediting: Interest will be compounded and credited to the account monthly.
- Accrual of Interest on Deposits Other Than Cash: Interest begins to accrue no later than the business day we receive credit for the deposit of the non-cash items (for example, checks).
- Statements: You will receive monthly statements. Checks will not be returned with the statement.
APY = Annual Percentage Yield.
Rates are subject to change.
Fees could reduce earnings.
Opening an American Bank HSA NOW Account
Please contact your benefits plan administrator or insurance professional to ensure that you are eligible (meaning you are enrolled in a qualified HDHP) and that you completely understand how an HSA works. Then contact American Bank at any of our convenient offices to establish your HSA and set up a contribution program.
Questions and Answers About HSA accounts?
For detailed information regarding Health Savings Accounts, please visit the U.S. Treasury website or see your tax professional. For more information about American Bank Health Savings Accounts, please call us toll free at 1-888-509-9292.