A Health Savings Account (HSA) is a federally approved tax-exempt account that eligible individuals can set up to subsidize their increased cost of healthcare. If individuals have a High Deductible Health Plan (HDHP), they may be eligible for an HSA. Our interest-bearing HSA Checking Account offers the following features:
To qualify for an HSA, the following requirements must be met:
There are limits to annual contributions.
Self-only HDHP coverage no more than $3,500
Family HDHP coverage no more than $7,000
Catch-Up contributions for individuals age 55 and over: $1,000
Hope Act of 2006: Allows an once-in-a-lifetime distribution from an IRA to be directly contributed to an HSA up to the HSA annual regular contribution limit.
Distributions can be made for various health-related costs and there is no required minimum distribution amount, so funds may be carried forward from year to year. Individuals can receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses they incur after establishment of the HSA. If distributions are taken for other reasons, the amount withdrawn will be subject to income tax and may be subject to an additional IRS 20% tax unless the distributions are taken due to death, disability or age 65 or older. At age 65 or older, funds can be withdrawn for non-qualified medical expenses and will be taxable – but no IRS penalty will apply.
IMPORTANT NOTE ABOUT OVERDRAFTS: Overdrawing an HSA is prohibited by the Internal Revenue Code. If you create a negative balance in your HSA, it is no longer treated as an HSA. To prevent this disqualification from happening, if your HSA does not have sufficient funds for a payment transaction, Manasquan Bank will deny the payment and return the item to you.
For more information visit www.irs.gov and download Publication 969 – Health Savings accounts and other Tax-Favored Health Plans.< Back