How does an HSA work?
A Health Savings Account (HSA) is a tax-exempt custodial checking account established for the purpose of paying medical expenses in conjunction with a high-deductible health care plan. An HSA plan also creates tax incentives so individuals will save for future health and retirement needs.*
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HSAs allow you to save pre-tax dollars to cover future out-of-pocket medical expenses. You deposit funds in this unique savings account and withdraw them as needed for qualifying medical expenses. Penalties apply if you access your HSA funds for any reason other than approved medical expenses.
Who is eligible for this type of account?
In order to open an HSA, your current health insurance plan must be considered a High Deductible Health Plan (HDHP).
What exactly are the tax benefits?
Money that you designate for your Health Savings Account goes directly into your account without being taxed and, while in the HSA, earns tax-free interest. When you use these funds to pay for qualifying medical expenses, they come out of your account still untaxed. This allows you save money for medical expenses and avoid paying any income tax or capital gains tax on these funds. After the age of 65, withdrawal restrictions loosen and any money remaining in your HSA can be treated similar to a tax-deferred retirement fund.
Who are HSAs for?
HSAs are best suited to individuals whose health care plan requires a high deductible. When you have a medical expense, money in your HSA can be used to meet your deductible. Money in your HSA can also be used to pay for some medical treatments that may not be covered by your health plan such as some over-the-counter medications, acupuncture and LASIK eye surgery.
Partnering with Peoples Bank
As your community bank, Peoples Bank is dedicated to listening to our customers and giving back to our communities. Our friendly associates make every effort to be a resource where customers can learn about financial products and services. Learn more about HSAs and find out if you qualify. We always take time to find the best banking solutions for you. Stop by or call us today! Peoples Bank offers ten convenient locations in Northwest Iowa, Southwest Minnesota, and Southeast South Dakota.
* Please consult your tax advisor to determine your eligibility on any of the above statements.
Rate Information – This is an interest-bearing account. The interest rate and annual percentage yield (APY) will depend on daily balance. The interest rate and APY may change. Interest will begin to accrue the business day we receive credit for the deposit of non-cash items (i.e. check).
