Health Savings Accounts (HSAs) are designed for employees with high deductible plans. An HSA is a 100% tax-deductible savings account used to pay for qualified medical expenses. Any unused amounts will earn interest and roll over from year to year. Hilltop charges a one-time $25 set up fee and a $3 monthly maintenance fee for HSAs.

HSAs offer valuable benefits:

Tax Savings: Contributions, distributions and earned interest are tax-free and tax-deductible.
Lower Insurance Premiums: Premiums will be reduced when you switch to a high deductible health plan.
Portable:You own your account, and you keep your account even if you change jobs.
Long-Term Savings: You can choose to use your money now or save for future medical expenses. After you turn 65, you may use the money for medical expenses and Medicare premiums.
Earn Interest: Let the funds grow and earn interest tax-free.

 

Have questions? See our Frequently Asked Questions below, Call us today at (307) 577-3459, or Email a Representative.

 

Health Savings Accounts FAQs

What is a Health Savings Account (HSA)? Health Savings Accounts (HSAs) were created in the Medicare Prescription Drug, Improvements, and Modernization Act of 2003 signed by President Bush on December 8, 2003. An HSA is a 100% tax-deductible savings account used to pay for qualified medical expenses. Any unused amounts will earn interest and roll over from year to year.

Who qualifies to have an HSA? To receive a tax deduction for contributions to an account, an individual must be:
• Covered under a high deductible health plan (HDHP)
• Not covered by any other health plan that is not an HDHP
• Not currently enrolled in any Medicare benefit
• May not be claimed as a dependent

What is a High Deductible Health Plan (HDHP)? A qualified high deductible health plan is a health insurance plan that meets the following requirements:
• HSA deductible requirements for 2016
• Minimum deductible $1,300 for single
• $2,600 for family
• Maximum out-of-pocket $6,550 for single
• $13,100 for family

How much can I contribute? Any eligible individual, employee or employer may contribute and receive a tax deduction for contributions made up to the statutory limits of $3,400* for an individual or $6,750* for family coverage for the entire 2016 year. Contribution limits are tax deductible and eligibility is calculated on a monthly basis. In addition to maximum contribution amount, catch-up contributions may be made by or on behalf of individuals over the age of 55 (2016 indexed amount is $1000*).

How often can HSA contributions be made? Is there a deadline? After an HSA is established, the maximum annual HSA contribution can be made anytime, at any frequency after the start of the tax year through the account holder’s tax filing deadline (without extensions). Therefore, an account holder can make contributions for a prior year up until he/she files their taxes or April 15th.

Who is the owner of the Account? Can the account be held in joint ownership? No, the account cannot be held in joint ownership. There is only a primary account holder. Family members may be signers on the account, but are restricted from receiving account information. Account holders may also designate beneficiaries.

What are “qualified medical expenses”? Qualified medical expenses are out-of-pocket medical expenses paid by the account holder for his or her spouse or dependents as defined in section 213 of the IRS code. Qualified medical expenses must be incurred after the HSA is established and may include office visits, lab fees, x-rays, hospital charges, chiropractic, eye exams, glasses, contacts, dental expenses, therapy treatments and prescriptions, just to name a few. Under the Affordable Care Act, individuals may use their Health Savings Accounts (HSA) for over-the-counter medicine or drugs (“OTC Drugs”) only if prescribed by a physician (insulin excepted). Generally, insurance premiums are not an eligible expense; however, premiums for long-term care insurance, COBRA and Medicare are excepted from this rule.

How can Account Holders spend HSA money? Hilltop National Bank provides a free starter checkbook and a Visa debit card to pay for qualified medical expenses. After your account is opened, you will receive your Visa debit card within 7-10 business days and it may be used anywhere Visa is accepted.

Are distributions from an HSA taxed? Distributions from an HSA are tax-free and excluded from taxable income if used for qualifying medical expenses incurred by the account holder, spouse or tax-dependent. The account holder should be prepared to pay taxes AND a 20% excise tax on distributions used for non-qualifying medical expenses. An exception is made after the account holder attains age 65.

How can I balance my HSA account? Account holders will receive monthly statements and can access account information online.

Can I use my HSA for qualifying medical expenses that were incurred before the account was established? No. Account holders may use their account for expenses incurred after the account was opened.

Can an HSA be offered under a Section 125 Cafeteria Plan? Yes. Once the employer has established a qualified Section 125 Cafeteria plan, an employee may elect to have their HSA contributions deducted from their paycheck on a pre-tax basis.

What discrimination rules apply to HSAs? According to the IRS, if an employer makes HSA contributions, the employer must make comparable contributions on behalf of all employees with comparable coverage.

Can my HSA account earn interest? Yes, and any interest earned is tax-free.

What is Hilltop National Bank’s responsibility as the HSA Trustee? We are not required to “police” the accounts. It is the account holder’s responsibility to maintain the account, determine whether he or she is eligible for HSA Contributions, and ensure HSA distributions are used for qualified medical expenses. As required by the IRS, account holders must be able to substantiate all distributions.

What are the tax reporting requirements? Account holders must report their HSA information on IRS form 8889. Hilltop National Bank is also required to report contributions and distributions to the IRS.

Who should I contact at Hilltop National Bank for more information?

Please contact the Human Resources Department at (307) 577-3459; or Email a Representative.