Curious About a Health Savings Account? What You Need to Know
Insights from Sturgis, Your Michigan Community Bank
The average American earning $50,000 spends more than $5,000 annually on health care. Roughly 15% of that cost, around $800, is for out-of-pocket fees such as deductibles, copays, and any expense not covered by the insurance plan.
What if you could save part of your paycheck, earn tax-free interest on your investment, and use the funds to pay for some of your medical expenses? We’ve just described a Health Savings Account (HSA). To help you decide if the HSA is right for you, the Sturgis Bank team prepared the following overview.
In addition to offering tax-free interest and funds to help with your medical fees, HSAs provide several advantages:
- Contributions to your Health Savings Account aren’t taxed, meaning you receive the full value of your deposits. When you schedule automatic deductions from your paycheck, you’ll reduce the amount of federal taxes you pay by the amount you save in your HSA.
- You can use your HSA deposits to cover many types of medical care, including ambulance service, over-the-counter medications, dental treatments, birth control, and flu shots. Here’s a complete list of expenses you can claim, according to the IRS.
- While many companies offer employees HSAs as part of their benefits package, individuals can open a Health Savings Account outside of an employer program.
- When you withdraw funds from your HSA to pay a medical expense, you don’t pay taxes on the money.
- And if you don't spend all the funds in your HSA during the year, you can rollover the funds to pay medical expenses in the following year.
HSA Key Points
Health Savings Accounts have several conditions and guidelines to consider.
- To qualify for a Health Savings Account, you must enroll in a High Deductible Health Plan (HDHP), a plan with a minimum $1,400 deductible for individuals or $2,800 for families. HDHPs typically have lower insurance premiums, but you pay more of your health care costs before the insurance company begins to pay its share.
- You have limits to the amount of money you can put into your HSA. In 2020, individuals can contribute up to $3,550 and families up to $7,100.
- Annual contribution limits are reviewed and may change year-to-year. It’s a good idea to consult with the IRS on applicable changes.
HSAs are Available through Your Community Bank
Many banks in Michigan, including Sturgis Bank, have HSA options if you qualify to open an interest-bearing Health Savings Account.
Features of the Sturgis HSA include the following:
- An opening deposit of less than $100
- A Visa Check Card
- First 50 checks are free
- Direct deposit and eStatements are available
- No service fees if you maintain a balance of at least $1,000
Opening your personal HSA at Sturgis is easy. Just visit one of our branch offices, talk with one of the cheerful, friendly Sturgis team members, and start saving!
For companies interested in setting up HSAs for employees, Sturgis Bank offers same-day on-site HSA enrollments. We’ll meet with your team, provide a brief overview of HSA features and benefits, and create accounts for those interested—it’s that easy!
Contact us if you have questions about HSAs. As your hometown bank, we’re here to help make your financial life better.