Tools and Support

To be an eligible individual and qualify for an HSA, you must meet the following requirements. 1) You are covered under a high-deductible health plan (HDHP) on the first day of that month 2) You covered under an HSA qualified High Deductible Health Plan (HDHP) and have no other health coverage except what is permitted under “Other health coverage” 3) You are not enrolled in Medicare 4) You cannot be claimed as a dependent on someone else’s tax return.

An HSA is a special tax-advantaged savings account similar to a traditional Individual Retirement Account (IRA) but designated for medical expenses. An HSA allows you to pay for current eligible healthcare expenses and save for future qualified medical and retiree healthcare expenses on a tax-favored basis.

HSAs provide triple-tax advantages: contributions, investment earnings, and qualified distributions all are exempt from federal income tax, FICA (Social Security and Medicare) tax and state income taxes (for most states).

Unused HSA dollars roll over from year-to-year, making HSAs a convenient and easy way to save and invest for future medical expenses. You own your HSA at all times and can take it with you when you change medical plans, change jobs or retire.

Funds in the account not needed for near-term expenses may be able to be invested, providing the opportunity for funds to grow. Refer to the Consumer Portal to find out your investment options.

To be eligible to set up an HSA and to make contributions, you must be covered by a qualified high-deductible health plan, or HDHP.

1. To be eligible to contribute to an HSA, you must be covered by a qualified HDHP and have no other first dollar coverage (insurance that provides payment for the full loss up to the insured amount with no deductibles).
2. You may use your HSA to help pay for medical expenses covered under a HDHP, as well as for other common qualified medical expenses.
3. Unused HSA funds remain in your account for later, and may be able to be invested in a choice of investment options, providing the opportunity for funds to grow.

HSAs work in conjunction with an HDHP. All the money you (or your employer) deposit into your HSA up to the maximum annual contribution limit is 100% tax-deductible from federal income tax, FICA (Social Security and Medicare) tax, and in most states, state income tax. This makes HSA dollars tax-free. You can use these tax-free dollars to pay for expenses not covered under your HDHP until you have met your deductible.

The insurance company pays covered medical expenses above your deductible, except for any coinsurance; you can pay coinsurance costs with tax-free money from your HSA. In addition, you can use your HSA tax-free dollars to pay for qualified medical expenses not covered by the HDHP, such as dental, vision and alternative medicines.
 
Contributions
Tax-free contributions to your HSA can be made in a variety of ways, including:

1. Pre-tax payroll contributions, if available through your employer.
2. Online transfers — transfer funds directly to your HSA from your linked personal savings or checking account
3. Send a check to First American Bank Health Account Services for deposit into your HSA.
4. Rolling over or making a transfer from an existing IRA (Individual Retirement Account) to an HSA, but only once in your lifetime.

Distributions
Distributions from your HSA are used to pay for qualified medical expenses. This can be done by the following methods:

1. Paying for purchases and medical services using your First American Bank Health Account Services prepaid Mastercard^® debit card.
2. Using online bill pay through your online Consumer Portal.
3. Requesting self-reimbursement through the Consumer Portal when you have already paid out-of-pocket for qualified expenses.
4. Paying with an HSA check (fees may apply).

How It Works
Your HSA allows you to save pre-tax income that you can use to pay for qualified short- and long-term medical expenses. It complements your HDHP, giving you an additional method to save specifically for healthcare costs.

For 2020, the maximum contribution for an eligible individual with self-only coverage is $3,550 and the maximum contribution for an eligible individual with family coverage is $7,100. Individuals who are eligible individuals on the first day of the last month of the taxable year (December for most taxpayers) are allowed the full annual contribution (plus catch up contribution, if 55 or older by year end), regardless of the number of months the individual was an eligible individual in the year.

• HSA accountholders can choose to save up to $3,550 for an individual and $7,100 for a family (HSA holders 55 and older get to save an extra $1,000 - and these contributions are 100% tax deductible from gross income.
• Minimum annual deductibles are $1,400 for self-only coverage or $2,800 for family coverage.

Annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) cannot exceed $6,900 for self-only coverage and $13,800 for family coverage.

You can invest a portion of your HSA in a variety of different mutual funds. These mutual funds may provide higher yields than you would otherwise earn if your funds were left solely in your HSA. The HSA is composed of two parts: A checking portion – This is an interest bearing account. You can make deposits, and use your debit card to pay any qualified medical expenses. The checking portion is an FDIC insured deposit account. The investment portion gives you the ability to invest in a variety of nationally recognized mutual funds. Savings held in the investment portion are not insured by the FDIC, not bank guaranteed and may lose value.

Please refer to the Consumer Portal for a listing of investments available to you along with their return rate. Via Consumer Portal, you may choose which mutual funds you wish to purchase and sell. You may use Consumer Portal to review your investments as well as update the percentage allocated to each mutual fund you have chosen.