Health Savings Account (HSA)
Save for unforeseen medical expenses with this smart savings plan. An HSA allows you to save on a tax-advantaged* basis. Withdrawals are tax-free if used to pay for qualified medical expenses. So the next time you're sick, you can go to the doctor without breaking your budget.
- Greater personal control over healthcare management and expenses
- Prepare for qualified medical expenses
- Earn interest above standard savings on entire balance
- An HSA provides triple tax savings:
- Tax deductions when you contribute to your account
- Tax-free interest earnings
- Tax-free withdrawals for qualified medical, dental, vision expenses, and more*
- Contributions are tax-free and can be made by you, your employer, or a third party
- $3.00 monthly fee
- Waived with Online Statement or $5,000 balance
- No minimum balance requirements
- Free debit card
- Unused funds remain in account year after year; no "use it or lose it" policy
- Keep your HSA in your name, regardless of career or life changes
- Federally insured
- No minimum deposit to open
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
Important reminders about qualified medical expenses:
- Items that are merely beneficial to an individual’s general good health, such as vitamins or dietary supplements are not qualified medical expenses.
- Drugs must be purchased legally.
- Remember to save your receipts and your doctor’s prescriptions for over-the-counter medicines for tax purposes.
- There may be situations when your doctor recommends a treatment that will be good for your health, but it still may be considered ineligible, such as a vacation.
- As the HSA owner, you are ultimately responsible for determining whether a health care expense is eligible for reimbursement from your HSA.
- If an HSA expenditure is not used for a qualified medical expense, you will be required to pay income tax and a 20 percent penalty on the amount used. The penalty tax does not apply to payments made after your death or disability, or after you reach age 65.
- You cannot pay for medical expenses that incurred before the Health Savings Account was established.
How much can I contribute?
Maximize your contributions to receive the maximum tax deduction.
Any eligible individual can contribute to an HSA. For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year.
For an HSA established by a self-employed (or unemployed) individual, the individual can contribute.
Family members or any other person may also make contributions on behalf of an eligible individual.
Contribution Limit (Single)
Contribution Limit (Family)
Additional Catch Up Contribution - 55 or Older (Single and Family)
* Subject to annual cost-of-living adjustments
What is an HSA?
A Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.
The account is established for the purpose of paying or reimbursing qualified medical expenses for you, your spouse, and your dependents.
Your employer may already have some information on HSA trustees in your area.
Am I eligible for an HSA?
To be an eligible individual and qualify for an HSA, you must meet the following requirements:
- You must be covered under a high deductible health plan (HDHP).
- You have no other health coverage with the exception of coverage for: Accidents, Disability, Dental Care, Vision Care, or Long-term care.
- You are not enrolled in Medicare.
- You cannot be claimed as a dependent on someone else's tax return.
* Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers).
If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you.
If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. This is true even if the other person does not actually claim your exemption.
Each spouse who is an eligible individual who wants an HSA must open a separate HSA. You cannot have a joint HSA.
When is the Contribution deadline for funding an HSA?
The deadline for regular and catch-up HSA contributions is your federal income tax return due date, excluding extension, for that taxable year. The due date for most taxpayers is April 15th.
What happens to my HSA in the event of my death?
If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death.
If your spouse is not the designated beneficiary of your HSA, the account stops being an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die.
If your estate is the beneficiary, the value is included on your final income tax return.
Where can I find additional information regarding HSA’s?
Additional information may be found on the IRS website at www.irs.gov.
Publication 969 – Health Savings Accounts and other tax-favored health Plans
Publication 502 – Medical and Dental Expenses
How do I keep track of how much money is in my HSA?
- Monthly statements will be mailed / emailed to you
- Online account information is available at www.fm.bank
- By telephone via the EZ Access Line by calling 419-446-2451 or toll free 888-446-2451
- By telephone, you can speak to a customer service representative Monday to Friday, 8:00 am to 5:00 pm by calling 419-446-2501 or toll free 800-451-7843
Will my money earn interest?
Yes, there is no minimum balance to earn interest. Inquire for current interest rates.
What if I am only covered for part of the year?
Both the HSA contribution and catch-up contribution will be pro-rated on the number of months of the year you are eligible, meaning that you are covered by a HDHP.
Do I have to spend all of the money I contribute each year?
No, any money that is contributed and not used will remain in the account. The funds belong to the employee regardless of use or employment status.
Any remaining funds at the end of the year will be carried over to the following year.
How do I pay for medical expenses with my HSA?
A check may be written to pay for medical expenses. A debit MasterCard may also be used anywhere that MasterCard is accepted.
If you need to pay with cash, you can use your debit card to withdraw cash at an ATM.
What if I buy something that is not a qualified medical expense?
You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA.
If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax.
What are the benefits of an HSA?
- You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040.
- Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
- The contributions remain in your account until you use them.
- The interest or other earnings on the assets in the account are tax free.
- Distributions may be tax free if you pay qualified medical expenses.
- An HSA is “portable.” It stays with you if you change employers or leave the work force.
*Consult a tax advisor.