What is an HSA?
A Health Savings Account (HSA) is a savings account just like any other savings account that you would open up at a bank. What is special about this specific type of savings account is that it is tax-deductible. This just means that if you deposit money in this account, there will be no federal income tax on the money at the time the deposit was made. They also roll over every year not spent. The money in this savings account is used to cover qualified medical expenses. What counts as “qualified” will depend on both federal regulations and the institution from which you obtained the HSA.
These savings accounts operate fairly similar to their sister savings account, the IRA (Individual Retirement Account). You are saving money tax-free, but instead of using them for retirement, you are using them to pay for medical expenses. Hence, you will probably be dipping into your HSA throughout the years while an IRA is left alone until retirement. However, if you having extra money in your HSA at the time of retirement, you may withdraw money and use it for non-medical purposes.
Can I open an HSA?
The basic requirements to opening an HSA are 1) Be a United States tax-payer and 2) Be enrolled in an HDHP. Some other requirements are not being on Medicare and no being claimed as a dependent on your tax returns.
HSAs are savings accounts used by individuals that have a High Deductible Health Plan (HDHP). A deductible is the payment made by an individual before the insurance company covers the medical costs. People with a high deductible will probably want to take advantage of every opportunity to keep costs to a minimum. An HSA allows the individual to save money tax-free in order to provide assistance with paying medical bills.
Where can I open an HSA?
Any bank will give an option to open up an HSA. Some banks will outsource their HSAs to other institutions who specialize in these types of accounts. Opening an HSA is a pretty simple process and can be done online. Get in touch with us at (920) 268-1888 with any questions. If you are interested in setting up an HSA we can help you!