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on Thursday, November 7, 2024
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Health Savings Accounts
Health Savings Accounts: Just the Basics
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help you save for medical expenses. Here are some of the key points to know about HSAs:
Eligibility
- High-Deductible Health Plan (HDHP). You must be enrolled in an HDHP to open an HSA.
- No other health coverage. You cannot have other health coverage, except for certain types of insurance like dental or vision.
- Not enrolled in Medicare. You must not be enrolled in Medicare.
- Not a dependent. You cannot be claimed as a dependent on someone else’s tax return.
Tax Advantages
- Contributions. Made with pre-tax dollars, reducing your taxable income.
- Earnings. Grow tax-free within the account.
- Withdrawals. Tax-free, if used for qualified medical expenses.
Qualified Medical Expenses
- Qualified expenses. Includes deductibles, dental services, vision care, prescription drugs, and more.
- Nonqualified expenses. Nonqualified withdrawals from an HSA are subject to income tax and a 20% penalty, if you under age 65.
Contribution Limits
- Contribution limits. For 2025, the contribution limit for an individual is $4,300, up from $4,150 in 2024. You can contribute up to $8,550 to a family HSA for 2025, up from $8,300 in 2024.
- Catch-up contribution. An additional $1,000 catch-up contribution is allowed for those age 55 or older.
Portability and Rollover
- Rollover. Funds roll over year to year, so you don’t lose unspent money.
- Portable. The account is portable, meaning you keep it even if you change jobs or retire.
Investment Options
- Invest your funds. You can invest the funds in your HSA, potentially growing your savings over time.
HSAs are a great way to save for future medical expenses, while enjoying tax benefits and saving for retirement. First National Bank can assist eligible individuals open an HSA or add contributions from their employer. Call 515-232-5561 and ask to speak to an HSA specialist or stop by any of our Iowa bank locations.