Am I eligible for an HSA?
There are certain requirements that have to be met in order to qualify for and contribute to an HSA:
- You must have coverage under an HSA-qualified High Deductible Health Plan (HDHP).
- You can not be enrolled in Medicare.
- You can not be claimed as a dependent on another’s tax return.
- You can not have any other medical coverage.
- You can not receive Veterans Administration medical benefits three months prior to opening an HSA.
How much does an HSA cost?
An HSA is technically an account, so there is no cost. It’s an account into which you can deposit money on a tax-deferred basis. The only product you purchase with an HSA is a High Deductible Health Plan, an inexpensive plan that will cover you should your medical expenses exceed the funds you have in your HSA.
What is a “High Deductible Health Plan” (HDHP)?
You must have an employer-sponsored HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover.
How does an Avadian HSA Work?
Avadian’s HSA works like a checking account*, earning a competitive interest rate. The interest you earn is tax-deferred and paid monthly. You may also make deposits as you would with your checking account via direct deposit, in-branch visits or automatic transfers.
Contributions made to your HSA are tax-deductible, and your maximum yearly contribution is determined by your choice of health plan program (single or family). Individuals 55 and older are allowed to make additional “catch-up” contributions.**
*There is a minimum opening deposit requirement. Courtesy Pay and other overdraft sources are not available for HSAs.
**Contributions and plan deductible limits change frequently. Please consult with your tax advisor or your employer’s Human Resources department regarding your individual circumstances.
How can I use the money in my HSA?
You can use the money in your HSA to pay for any “qualified medical expense” permitted under federal tax law. In general, this includes most medical, dental, hearing and vision expenses, as well as prescription drugs.
Who decides whether the money I’m spending from my HSA is for a “qualified medical expense”?
You are responsible for that decision, and therefore should familiarize yourself with what qualified medical expenses are (as partially defined in IRS Publication 502, available at www.irs.gov) and also keep your receipts in case you need to defend your expenditures or decisions during an audit.
What happens if I don’t use the money in the HSA for medical expenses?
If the money is used for something other than qualified medical expenses, the expenditure will be taxed and, for individuals who are not disabled or over age 65, subject to a 10% tax penalty.
Can I use the money in my HSA to pay for medical care for a family member?
Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty. This is one of the greatest advantages of HSAs.
How can I access the funds in my HSA?
You may conveniently withdraw the funds from your account in-person or by writing a check to pay for your health care expenses tax-free. You may also make transfers and easily access your funds via internet banking at www.avadiancu.com and telephone banking.
What if I don’t use the funds in my HSA by the end of the year?
The money in your HSA rolls over from year to year. So if you don’t use it, you don’t lose it! And since you are the owner of your HSA, it doesn’t matter what your job status is or whether your employer makes contributions to your plan. The funds in your HSA can always be used for qualifying medical expenses and an existing HSA can also be conveniently transferred to Avadian.
What happens to the money in my HSA when I die?
What happens depends on how the HSA is designed. If your spouse is designated as the beneficiary by you, your spouse becomes the owner of the HSA when you die. If you provide that it goes to your estate or other entity, the value of the HSA at death is income to the estate or other entity.
What is the difference between a Flexible Spending Account and an HSA?
With a flexible spending account, the money does not roll over. The funds in your HSA roll over automatically each year until used. You can save your money for future medical expenses. As long as you use the money for qualified medical expenses, your funds will not be taxed (with the exception of your dividends).
Why would I pick an Avadian HSA over another HSA program?
Avadian’s HSA offers a competitive rate of interest, no monthly minimum balance charges, no annual fees and the ease of making transfers from your existing Avadian accounts.