1. I heard that a Health Savings Account (HSA) is a special tax-sheltered account that is similar to an IRA, but overall how does an HSA work?

The savings account portion of the HSA plan works in conjunction with a “high deductible” health insurance plan. All the money deposited in the HSA is 100% tax-deductible which makes those dollars “tax-free”. The insurance company pays the “big” bills (covered expenses in excess of the deductible) and you pay the “small” bills with tax-free money in your HSA account. You can even use these tax-free dollars to pay for medical expenses not covered under the insurance plan, such as dental, vision, alternative medicines etc. What you don’t use is yours to keep and accumulate towards your retirement.

** Consult with your tax or legal professional for guidance.
2. What is required in order to set up a qualified HSA?
You must first be insured under a qualified high deductible major medical plan offered by your employer or obtained on your own. Once the qualified high deductible plan is set up, you or your employer is then eligible to establish and make contributions to your HSA savings account.
3. Is there a limit on how much I can contribute to my HSA each year?
You can contribute up to the amount of your HDHP deductible but no more than:

  • $3,250.00* Self-only Coverage
  • $6,450.00* Family Coverage
*2013 amounts; adjusted annually for inflation.

4. How much does it cost to set up an HSA and are there any ongoing administration fees once the account is set up?

FEES AND CHARGES
 Deposit amount required to open: $100.00
 A $25.00 one-time setup fee will be imposed on the Health Savings Account. 
 A $25 fee will be imposed upon closing or transfer of the account.
There is no transaction fee for distributions from the Health Savings Account.
5. What will I receive once the account is set up?

  • You will receive information on how to use the account.
  • A starter book of checks and a debit card.

6. How do I make deposits to my account?
Deposits can be mailed directly to our HSA Administrator or you can set up an automatic transfer into your HSA.
7. Do I have to fund my account every year?
No, you do not have to fund your account each year but you do need to maintain a low minimum balance in the HSA. However, it is to your advantage to make annual contributions in order to take full advantage of the tax savings in accordance with IRS guidelines as well as save money for retirement (age 65).
8. What expenses can I use my HSA account for?

  • Your HSA may be used for qualified medical, dental, vision and prescription drug expenses as defined in IRS Publication 502. Your insurance premium cannot be paid through your HSA, unless you are unemployed or on COBRA.
  • Funds can be withdrawn as supplemental retirement income at age 65. Funds withdrawn at that time are considered taxable income.
  • Funds withdrawn prior to age 65 for non-qualified expenses are taxable income and are subject to a 10% penalty.

9. What happens to my HSA bank account if I never withdraw funds or if I change jobs, leave the workforce or retire?
Your HSA account belongs to you and can be transferred from one employer to the other. The less money you spend on medical expenses, the more will remain in your HSA account while earning interest. Your account grows with you towards retirement and is treated as a typical IRA with all the IRS guidelines applying. At age 65 funds can be withdrawn in their entirety without penalty for any reason. Remember that the HSA bank account is portable. You own it. You take it with you wherever you go.
10. What expenses are counted toward my deductible?
Covered services are reimbursed based on the plan of benefits elected. Click here for an extensive list of Eligible Medical Expenses.
11. What happens if my medical expenses exceed the amount of my deductible?
If your covered expenses for the year exceed the deductible of your HSA major medical insurance plan, the plan will take over and pay the balance of the qualified expense in accordance with the plan of benefits elected.
12. How do I pay for medical care with my HSA?
You can access your HSA funds by using your HSA debit card, checks or withdrawal in person.
13. Can I go see any doctor I want with the HSA plan?
Yes! An HSA is NOT an HMO! With an HSA, you are free to use any doctor and any hospital you choose. However, significant savings are available to you for choosing an in-network provider for care.
For more information about the benefits of Health Savings Accounts, please visit the United States Department of Treasury.