Updated: Dec 1, 2021
How to pay your medical expenses TAX FREE!
Health Savings Accounts (HSA) Start saving more on healthcare.
A Health Savings Account (HSA) is an individually-owned, tax‐advantaged account that you can use to pay for current or future IRS‐qualified medical expenses. With an HSA, you’ll have the potential to build more savings for healthcare expenses or additional retirement savings through self-directed investment options¹. How an HSA works:
You can contribute to your HSA via payroll deduction, online banking transfer, or by sending a personal check to HSA Bank. Your employer or third parties, such as a spouse or parent, may contribute to your account as well.
You can pay for qualified medical expenses with your Health Benefits Debit Card directly to your medical provider or pay out-of-pocket. You can either choose to reimburse yourself or keep the funds in your HSA to grow your savings.
Unused funds will roll over year to year. After age 65, funds can be withdrawn for any purpose without penalty (subject to ordinary income taxes).
Check balances and account information via HSA Bank’s Member Website or mobile device 24/7.
Are you eligible for an HSA? If you have a qualified High Deductible Health Plan (HDHP) – either through your employer, through your spouse, or one you’ve purchased on your own – chances are you can open an HSA. Additionally:
You cannot be covered by any other non-HSA-compatible health plan, including Medicare Parts A and B.
You cannot be covered by TriCare.
You cannot have accessed your VA medical benefits in the past 90 days (to contribute to an HSA).
You cannot be claimed as a dependent on another person’s tax return (unless it’s your spouse).
You must be covered by the qualified HDHP on the first day of the month.
When you open an account, HSA Bank will request certain information to verify your identity and to process your application.What are the annual IRS contribution limits? Contributions made by all parties to an HSA cannot exceed the annual HSA limit set by the Internal Revenue Service (IRS). Anyone can contribute to your HSA, but only the account holder and employer can receive tax deductions on those contributions. Combined annual contributions for the account holder, employer, and third parties (i.e., parent, spouse, or anyone else) must not exceed these limits.2According to IRS guidelines, each year you have until the tax filing deadline to contribute to your HSA (typically April 15 of the following year). Online contributions must be submitted by 2:00 p.m., Central Time, the business day before the tax filing deadline. Wire contributions must be received by noon, Central Time, on the tax filing deadline, and contribution forms with checks must be received by the tax filing deadline.
IRS Guidelines & Eligible Expenses
The IRS sets limits each year for maximum contributions to each type of account-based benefit.
Health Savings Account (HSA) – IRS Limits
Catch-up Contributions Accountholders who meet these qualifications are eligible to make an HSA catch-up contribution of $1,000: Health Savings accountholder; age 55 or older (regardless of when in the year an accountholder turns 55); not enrolled in Medicare (if an account holder enrolls in Medicare mid-year, catch-up contributions should be prorated). Authorized signers who are 55 or older must have their own HSA in order to make the catch-up contribution.How can you benefit from tax savings?
An HSA provides triple tax savings.3 Here’s how:
Contributions to your HSA can be made with pre-tax dollars and any after-tax contributions that you make to your HSA are tax deductible.
HSA funds earn interest and investment earnings are tax-free.
When used for IRS-qualified medical expenses, distributions are free from tax.
IRS-Qualified Medical Expenses You can use your HSA to pay for a wide range of IRS-qualified medical expenses for yourself, your spouse, or tax dependents. An IRS- qualified medical expense is defined as an expense that pays for healthcare services, equipment, or medications. Funds used to pay for IRS-qualified medical expenses are always tax-free. HSA funds can be used to reimburse yourself for past medical expenses if the expense was incurred after your HSA was established. While you do not need to submit any receipts to HSA Bank, you must save your bills and receipts for tax purposes.
Examples of IRS-Qualified Medical Expenses4:
Acupuncture Alcoholism treatment Ambulance services Annual physical examination Artificial limb or prosthesis Birth control pills (by prescription) Chiropractor Childbirth/delivery Convalescent home (for medical treatment only) Crutches Doctor’s fees Dental treatments (including x-rays, braces, dentures, fillings, oral surgery) Dermatologist Diagnostic services Disabled dependent care Drug addiction therapy Fertility enhancement (including in-vitro fertilization) Guide dog (or another service animal)
Gynecologist Hearing aids and batteries Hospital bills Insurance premiums5 Laboratory Fees Lactation expenses Lodging (away from home for outpatient care) Nursing home Nursing services Obstetrician Osteopath Oxygen Pregnancy test kit Podiatrist Prescription drugs and medicines (over-the-counter drugs are not IRS-qualified medical expenses unless prescribed by a doctor) Prenatal care & postnatal treatments Psychiatrist
Psychologist Smoking cessation programs Special education tutoring Surgery Telephone or TV equipment to assist the hearing or vision impaired Therapy or counseling Medical transportation expenses Transplants Vaccines Vasectomy Vision care (including eyeglasses, contact lenses, lasik surgery) Weight loss programs (for a specific disease diagnosed by a physician – such as obesity, hypertension, or heart disease) Wheelchairs X-rays
Investment accounts are not FDIC insured, may lose value and are not a deposit or other obligation of, or guaranteed by the bank. Investment losses which are replaced are subject to the annual contribution limits of the HSA.
HSA funds contributed in excess of these limits are subject to penalty and tax unless the excess and earnings are withdrawn prior to the due date, including any extensions for filing Federal Tax returns. Accountholders should consult with a qualified tax advisor in connection with excess contribution removal. The Internal Revenue Service requires HSA Bank to report withdrawals that are considered refunds of excess contributions. In order for the withdrawal to be accurately reported, accountholders may not withdraw the excess directly. Instead, an excess contribution refund must be requested from HSA Bank and an Excess Contribution Removal Form completed.
Federal Tax savings are available no matter where you live and HSAs are taxable in AL, CA, and NJ. HSA Bank does not provide tax advice. Consult your tax professional for tax‐related questions.
This list is not comprehensive. It is provided to you with the understanding that HSA Bank is not engaged in rendering tax advice. The information provided is not intended to be used to avoid Federal tax penalties. For more detailed information, please refer to IRS Publication 502 titled, “Medical and Dental Expenses”. Publications can be ordered directly from the IRS by calling 1-800-TAXFORM. If tax advice is required, you should seek the services of a professional.
Insurance premiums only qualify as an IRS-qualified medical expense: while continuing coverage under COBRA; for qualified long-term care coverage; coverage while receiving unemployment compensation; for any healthcare coverage for those over age 65 including Medicare (except Medicare supplemental coverage).
How to deposit funds into your HSA.
To maximize HSA tax and savings benefits, begin funding your account as soon as you can.
HSA Bank offers several convenient methods for making contributions to your HSA.
Payroll Deductions – If your employer offers this option, HSA Bank will facilitate recurring pre-tax payroll deductions. Contact your employer to complete the appropriate paperwork.
Online Transfers – On HSA Bank’s member website, you can transfer funds from an external bank account, such as a personal checking or savings account, to your HSA.
Check – Mail your personal check and completed Contribution Form to: HSA Bank, PO Box 939, Sheboygan, WI 53082How to pay for healthcare expenses from your HSA.**
Whether you want to reimburse yourself for an IRS-Qualified medical expense paid out-of-pocket or you want to pay directly from your HSA, HSA Bank offer multiple options for accessing your funds.
Health Benefits Debit Card – Your HSA Bank debit card from Visa® provides access to your HSA funds at point-of-sale with signature or PIN and at ATMs for withdrawals. Transaction fees may apply when used with a PIN.† Checks – A book of 50 checks can be ordered upon request for an additional fee.† You can use these checks to pay providers or reimburse yourself for expenses already incurred. Online Transfers – On HSA Bank’s member website, you can reimburse yourself for out-of-pocket expenses by making a one-time or reoccurring online transfer from your HSA to your personal checking or savings account. Online Bill Pay – Use this feature to pay medical providers directly from your HSA.
HSA Bank’s Health Benefits Debit Card can be used for point-of-sale transactions in two ways, signature or PIN. For signature, swipe card, press credit on the keypad, and sign the receipt. To pay using a PIN (fee per PIN transaction may apply†), swipe your card, select debit on the keypad, and enter your PIN. To withdraw HSA funds from an ATM (fee per ATM withdrawal may apply†), be sure to select the “checking” option (not savings) when asked the type of account you are withdrawing from. HSA Bank limits point-of- sale debit card transactions to medical merchants. As a mechanism for fraud protection, HSA Bank has set daily limits on debit card transactions. These limits are listed in your Deposit Account Agreement and Disclosures Booklet. Debit card transactions are also limited to your current balance.*The HSA Bank Mobile App is free to download. However, you should check with your wireless provider for any associated fees for accessing the internet from your device.
**You can pay for a wide range of IRS-qualified medical expenses with your HSA, including many that aren’t typically covered by health insurance plans. This includes deductibles, co-insurance, prescriptions, dental and vision care, and more. For a complete list of IRS-qualified medical expenses, visit irs.gov. †For applicable fees, see your HSA Bank Interest and Fee Schedule or Explanation of HSA Bank Fee Changes document.
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