HEALTH SAVINGS ACCOUNT
A Health Savings Account is a great way to manage the cost of healthcare, whether you’re single, have a family or are an employer who wants to help employees deal with healthcare costs.
Let’s go over the basics of Health Savings Accounts and how Sentry Bank can help manage your account. When you’re ready to get your HSA set up, reach out to a member of our team to get started.
WHAT IS A HEALTH SAVINGS ACCOUNT?
A Health Savings Account (HSA) is a savings account the government allows qualifying individuals to make tax deductible contributions to, which you can then use to cover out-of-pocket medical expenses.
HSAs can roll over from year to year. HSAs will also remain with you regardless of changes in employment or insurance coverage, as long as you continue to qualify.
You can decide how much to contribute annually to your HSA, however a penalty may be applied if government-mandated maximums are exceeded. The maximum limits are usually adjusted every year. Adults over the age of 55 can add an additional $1,000 onto the below limits.
For 2019 the limits are:
Individual – $3,500
Family – $7,000
Through Sentry Bank, you’ll receive a debit card or checks linked to your HSA. Then, you can use the funds as usual on eligible medical expenses including deductibles, copays, coinsurance and other qualified medical expenses.
QUALIFYING FOR A HSA
If you’re enrolled in a high-deductible health insurance plan (HDHP) as defined by the government, you can qualify for a HSA.
For 2019, the IRS defines a HDHP for an individual as a plan with an out-of-pocket maximum of $6,750 and a minimum deductible of $1,350. For a family plan in 2019, the out-of-pocket maximum is $13,300 and the minimum deductible is $2,700.
HSA contributions are pre-tax/tax-deductible, so the money grows tax-free and can come out tax free.
For example, if you make $40,000 per year and you put $3,000 in your HSA, you will be taxed as though you make $37,000, thus lowering your tax burden. But, if you use the money on non-eligible expenses, you have to pay income tax on that amount.
As an employer, we can assist you with distributing employee contributions – matching those with your own contributions – right into your employees’ accounts. There is no fee for this service.
For more information on Health Savings Accounts, drop in, or contact us today.
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