COVID-19 has shined a spotlight on growing concerns about rising health care costs. Unexpected medical expenses can drain your savings account, so what do you do to prepare? The credit union has a way to save for future medical expenses — while earning steady interest in a secure health savings account that offers you flexibility, tax advantages and convenient access to your funds. Read on to learn more about how a Health Savings Account could benefit you.
What is an HSA? A Health Savings Account (HSA) is a tax-advantaged savings account that you can use to pay for a wide variety of health expenses. It’s a great way to save for both day-to-day and future medical costs. Expenses include:
- Doctor’s office visits
- Vision expenses
- Dental expenses
- Long-term care insurance
HSA Eligibility. You must meet certain requirements to be eligible for an HSA; most importantly, you must be covered under a high deductible health plan (HDHP).
Can I move my HSA that’s currently at another financial institution? Yes, HSA owners may move their HSA assets to another financial organization, even if the contributions were made by their employers.
What are the advantages of a Health Savings Account?
- You own it. The money in your HSA is yours forever. No “spend it or lose it” requirements.
- Convenient access. Our HSAs include a free, dedicated debit card, and easy 24/7/365 access to your account through Online or Mobile Banking.
- Tax advantages.
- You put money in tax-free. If you are an employee whose employer’s works with an HSA provider, this will be taken out as a pre-tax deduction every paycheck. If you are an individual, you fund the account with your post-tax dollars and at the end of the year, you will get a tax form showing the total amount of contributions that you can deduct from your taxes.
- You can earn interest on your money or even invest it. Any gains you make are tax-free.
- You can withdraw your money at any point tax-free, so long as it is used for qualified medical expenses. Find out more about qualified medical expenses.
How do I access my HSA funds? The credit union provides several ways to access your funds:
- A HSA Visa debit card
- Online banking
- Or stop by a credit union branch to withdraw cash in person
HSA dollars fund a range of services. You can withdraw the money tax-free and penalty-free at any time and use it to cover copayments, coinsurance, as well as a variety of medical costs. Unlike an employer’s flexible spending account that must include a “use it or lose it” rule, you can roll over money you save in an HSA from year to year. HSAs have the potential to build large balances over years of contributions and some strong investment gains. That means participants theoretically could be able to pay for their own health care in their later years, when it is needed most.
Can I use my HSA funds for non-medical expenses? Yes, but the funds will be subject to income tax and a 20% IRS penalty (Penalty does not apply after age 65).
If a Health Savings Account is a good option for saving for health expenses for you and your family, we’d love to help!