Health Savings Accounts (HSA)
In light of rising healthcare costs, FEDCOM CU is pleased to offer Health Savings Accounts (HSA's) as a way for you to save for medical expenses. Our HSA's do not have an annual maintenance fee and offer the following benefits:
- Flexibility. Money in the account can be used to pay for any qualified health expense permitted under federal tax law including most medical, dental, and vision services as well as over-the-counter drugs such as aspirin.
- Tax Savings. HSA's also provide tax deductions when you contribute to your account, tax-free earnings on your account, and tax-free withdrawals for qualified medical expenses.
- Control. You make all the decisions about saving for current or future medical expenses and when to make withdrawals.
- Portability. You can continue to use the HSA even when changing jobs or medical coverage, becoming unemployed, changing marital status, or moving to another state.
- Safety. HSA funds are federally insured by the National Credit Union Administration.
Health Savings Accounts can be opened at any FEDCOM CU Office. You must have an HSA-qualified "high deductible health plan" to open and contribute to an HSA and meet other requirements.
For more information about Health Savings Accounts, be sure to read the HSA Frequently Asked Questions below.
For specific information on FEDCOM CU's HSA program, call the FEDCOM CU Member Services Department at (616) 364-7283 or 1-888-364-6928, or send us your question via e-mail. For general information on HSA plans, visit the U.S. Department of the Treasury's HSA Web page.
HSA Frequently Asked Questions
What is a Health Savings Account?
A Health Savings Account is an account to save for future medical expenses. There are certain advantages in putting money into these accounts, including favorable tax treatment. Contributions to an HSA are deductible and distributions from a HSA are tax-free when used for qualified medical expenses. An individual can invest the assets as he/she wishes, and if the assets are not spent in a given year, the balance can be carried forward to a subsequent year. Unused funds are not lost at the end of the year.
Who can have a Health Savings Account?
Adults can contribute to an HSA if they:
- Have coverage under an HSA-qualified "high deductible health plan" (HDHP).
- Are not also covered by any other health plan that is not an HDHP (other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted).
- Are not enrolled in Medicare.
- Cannot be claimed as a dependent on someone else's tax return.
What features do FEDCOM CU's Health Savings Accounts offer?
- Earns dividends whenever ending daily balance is a minimum of $100. View current rates here.
- No annual fees or administration fees.
- Check writing availability.
- Payroll deduction available.
- No minimum balance to open.
- Minimum $100 balance to earn dividends.
- No overdraft privileges.
- No ATM access available.
- NSF fees apply for any returned check.
- All HSA's are federally insured by the NCUA up to the maximum limit.
- Home banking, electronic statements, and check images are available to HSA owners.
What qualifies as a High Deductible Health Plan?
An HDHP is health insurance that does not cover first dollar medical expenses. To qualify, federal law requires the following health insurance deductible minimums for 2016:
$1,300 – Self-only coverage
$2,600 – Family coverage
In addition, annual out-of-pocket expenses under the plan (including deductibles, co-pays, and co-insurance) cannot exceed:
$6,550 – Self-only coverage
$13,100 – Family coverage
Are there any contribution limits? If so, what are they?
Contributions to the HSA can be made by the individual, employer, or both. However, the total contributions are limited annually. Contributions can be made each year the individual is eligible. For 2016 Individuals may contribute up to the amount of the individuals HDHP deductible but no more than:
$3,350 – Self-only coverage
$6,750 – Family coverage
Individuals age 55 or older can also make additional "catch-up" contributions. The maximum annual catch-up contribution is as follows:
2009 and after – $1000
How can a Health Savings Account be used?
Money in the account can be used to pay for any "qualified medical expense" permitted under federal tax law. This includes most medical care and services, dental and vision care, and also includes over-the-counter drugs.
The money in the account may pay for medical expenses of the individual, spouse, or dependent children. The account can be used to pay for expenses of a spouse and dependent children even if they are not covered by the HDHP.
Any amounts used for purposes other than to pay for "qualified medical expenses" are taxable as income and subject to an additional 10% tax penalty. Examples include:
- Medical expenses that are not considered "qualified".
- Other types of health insurance unless specifically approved.
- Medicare supplement insurance premiums.
- Expenses which are not medical- or health-related.
After age 65, the 10% additional tax penalty no longer applies. If an individual becomes disabled and/or enrolled in Medicare, the account can be used for other purposes without paying the additional 10% penalty.
What happens to a Health Savings Account at death?
For married individuals, the spouse becomes the owner of the account and can use it as if it were his/her own HSA. If not married, the account will no longer be treated as an HSA upon death. The account will pass to the beneficiary or become part of the estate (and subject to any applicable taxes).