These accounts are offered to help individuals and families with high deductible health insurance plans to save money for qualified medical expenses. While this is an extremely helpful savings tool, many Americans are not familiar with this kind of account or how it works.
To be eligible for an HSA in 2014 you must have an annual deductible of at least $1,250 for an individual or $2,500 for a family
VCNB Senior Vice President Jane Nickels said that contributions to an HSA are tax deductible and withdrawals to pay qualified medical expenses are never taxed. The money you deposit into your HSA belongs to you – not your bank, employer or the government. That money rolls over from year to year and can be used only for approved medical expenses, according to Nickels.
“Our customers tend to like the HSA because their contributions and distribution are tax free. Once it’s set up, it’s easy to use and easy to maintain,” Nickels said.
She explained that unused money in your HSA isn’t forfeited at the end of the year. Instead, it continues to grow, tax-deferred. “Best of all, the unused money that you accumulate in your HSA rolls over to the next year so you never have to worry about losing your money,” she explained.
Qualified medical expenses are defined by the Internal Revenue Tax Code and you can read a list of these qualified medical, dental and vision expenses here.
A word of caution: any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate plus 20 percent tax penalty if you are under age 65.
At VCNB, our Health Savings Accounts feature free checks with unlimited check writing, a debit card, a monthly statement, online access and interest checking with tiered rates. There is a monthly service charge of $3 and an initial set-up fee of $25. However, if you open an HSA now through March 31, 2014 you can find a coupon here. This coupon can be used to waive the initial set-up fee.
Do you believe an HSA is right for you? At VCNB we have Account Representatives who can help you get started! Call your local branch or 1-800-542-5004 to talk with one of our knowledgeable accounts representatives. You can also watch a short video on our website by clicking here.