Are you familiar with the Health Savings Account or HSA? Many Americans could benefit from this type of savings account but are unaware that the option exists.

An HSA is a tax favored savings account used to pay for medical expenses. This account was created specifically to help individuals and families who have high deductible health insurance plans be able to save money for qualified medical expenses.

VCNB offers an HSA that is both affordable and easy to use, according to VCNB Senior Vice President Jane Nickels. Nickels said that to be eligible for an HSA in 2015, you must have an annual deductible of $1,300 for an individual and $2,600 for a family and must not be on Medicare.

She said that contributions, up to a limit, are tax deductible and withdrawals to pay qualified medical expenses are never taxed. The money you deposit into your HSA rolls over from year to year and continues to grow tax deferred.

The funds in your HSA can be used for qualified medical expenses for any family member who you claim on your taxes. Qualified medical expenses are defined by the Internal Revenue Tax Code. You can read the list of qualified medical, dental and vision expenses here.

Remember that any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate plus 20 percent tax penalty unless the funds are withdrawn for death, disability or after age 65.

Nickels explained some of the reasons customers like the HSA. “There are many, many reasons people like their HSA but they are becoming increasingly popular because of the rise in health care costs and changes in their insurance plans,” Nickels said.

She indicated that many younger people use their HSA to save for old age. “Because the money will roll over every year, a lot of young people see it as a tax free way to save for retirement. If you are healthy and don’t have many medical expenses, the savings can continue to accumulate until the time you need the money whether it be for medical expenses or for something else after you reach 65.

At VCNB, our Health Savings Accounts include a debit card, one box of free checks, a monthly statement, online access and interest checking with tiered rates. If you request a monthly paper statement, there is a $3 monthly fee. There is no fee if you accept electronic statements.

If you think an HSA would make your life better, contact your local branch or call 1-800-542-5004 to learn more or to get started. Click here to visit our Online Learning Center to view a video about our HSA.