Health Savings Account
The Health Savings Account (HSA), administered by HSA Bank, is a special tax-advantaged bank account that can be used to pay for IRS-qualified health expenses for you, your spouse, and your tax dependents. You may open an HSA only if you are enrolled in the Consumer Driven Health Plan (CDHP).
Tax advantages of HSA Accounts:
- HSA contributions are pre-tax or tax-deductible up to the annual HSA limits.
- All HSA earnings and interest are tax free.
- Qualified withdrawals are tax free.
This includes deductibles, co-insurance, prescriptions, dental and vision care, and more for yourself, your spouse, or tax dependents. For a complete list of IRS-qualified medical expenses visit irs.gov
Your HSA Bank will not require that you substantiate your purchases with a receipt, however, it is important to keep you receipts and documents of qualified expense in the event of an IRS audit.
Contributions to your HSA are reported on Form 5498. Distributions from your HSA are reported on Form 8889. This information is needed for tax filing purposes each year.
Non-qualified distributions are taxable and may have an associated 20% tax penalty in addition to 10% income tax.
Over contributions to your HSA Account may result in a 6% Excise Tax.
Resources:
- What is an HSA? (video)
- Updating Your Beneficiary Information within HSA Bank
- Making Changes to your HSA Contributions