One of the smartest financial moves you can make for the future can be a Health Savings Account. A Health Savings Account (HSA) is a tax-favored account used in conjunction with an HSA-compatible high deductible health plan. The HSA allows you to contribute funds on a pre-tax or tax-deductible basis, which you may use to pay for eligible medical expenses.
To be eligible and qualify for an HSA, you must meet the following requirements:
There are plenty of advantages to a Health Savings Account. Funds rollover each year, there’s no “use it or lose it’ and the account is FDIC insured. But the biggest advantage is the tax savings.
Contributions to a Health Savings Account are tax deductible (subject to IRS annual limits). This means you can reduce your taxable income by the amount you contribute to your HSA.
Eligible medical expenses such as prescriptions or dental and vision care can be purchased tax-free when you use your HSA. You can also pay out-of-pocket for eligible medical expenses and then reimburse yourself from your HSA.
The interest on HSA funds grows on a tax-deferred basis. And, unlike most savings accounts, interest earned on an HSA is not considered taxable income when the funds are used for eligible medical expenses.
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