Health Savings Account (HSA)
A health savings account (HSA) is a tax-advantaged savings account used to save and pay for qualified medical expenses. HSAs work in conjunction with a qualified High Deductible Health Plan (HDHP) to offer the following benefits:
- Tax-deductible contributions
- Tax-free distributions for qualified medical expenses
- Unused HSA funds can remain in the account year after year
- HSA funds can be used to pay for the qualified medical expenses of the account owner, his or her spouse, and dependents
To make contributions to an HSA the account owner must meet all of the following requirements:
- Covered under a qualified HDHP (defined below)
- Not covered by any other major medical health plan that is not a qualified HDHP
- Not enrolled in Medicare
- Cannot be claimed as a dependent on another person's tax return
An HDHP is a health insurance plan that has a minimum annual deductible and a maximum out-of-pocket expense cap. The deductible is the amount the insured must pay toward medical expenses, including prescriptions, before payments from the insurance company begin. The exception to this rule is preventive care (such as annual physicals or immunizations). Such care is covered by the insurance company regardless of the deductible.
The maximum out-of-pocket expense cap is the maximum amount the insured must pay toward medical expenses for the year. Any additional approved charges are paid for by the insurance company. Therefore, the cap limits the insured’s responsibility for large medical bills. Because of the high deductible, HDHPs have lower premiums than traditional health plans. The 2019 and 2020 deductible and out-of-pocket expense limits for HDHPs are as follows:
Minimum Annual Deductible
Maximum Out-of-Pocket Expense Cap
Deductible and out-of-pocket expense limits may be adjusted annually to account for cost-of-living increases.
Contributions for the current year can be made until April 15th of the following year. The contribution limits, which are based on the type of coverage, are as follows:
Eligible individuals who are age 55 or older can contribute an additional $1,000 to their HSAs. Contribution limits are indexed for inflation and can change annually.
Tax Treatment of Withdrawals
Withdrawals are tax free if the funds are used exclusively for paying or reimbursing qualified medical expenses (e.g., doctor visits, prescription drugs, and dental care visits for the account owner, his or her spouse and dependents). To be qualified, medical expenses must be incurred after the account is opened. Refer to IRS publications 969 and 502 for more information and a complete list of qualified medical expenses.
- Competitive dividend rate.1 View our Deposit Rates.
- No minimum balance required to open account or earn dividends
- Dividends compounded daily, paid monthly
- Monthly statement
- Special HSA debit card for purchases and ATM transactions
- Accessible via ATM, ASK SECU, online through Member Access, Mobile Access or our Mobile App, your local branch, and our 24/7 Member Services
- Ability to make payments through SECU’s BillPay Service
All or any portion of funds withdrawn from an HSA or from an Archer Medical Savings Account (Archer MSA),2
can be deposited back to an HSA as a rollover contribution according to the following rules:
- Rollovers are not subject to the annual contribution limits; however, owners can make only one rollover within a 12-month period.
- To qualify as a rollover and avoid a tax penalty, withdrawn funds must be re-deposited within 60 calendar days.
All or any portions of the funds in an HSA or in an Archer MSA can be transferred directly to another HSA tax-free. Transfers are made from custodian to custodian. Because the account owner never has the funds in his or her possession, an unlimited number of transfers are allowed without a tax penalty.
You can apply for a health savings account online via Member Access or open an account at your local branch.
1 Dividend rate and annual percentage yield (APY) are subject to change daily at the discretion of the Board of Directors.
2 An Archer MSA was a tax-deferred medical saving program that expired on December 31, 2007. After this date, no new Archer MSAs could be established; however, some Archer MSAs are still active.