Health Savings Accounts

Health Savings Accounts (HSAs) are tax-exempt accounts where funds grow to pay for medical expenses.  They create an alternative to traditional health insurance.   HSAs allow you to pay for current health expenses and save for future qualified medical expenses on a tax-free basis.  You must be covered by a High deductible Health Plan (HDHP) to be able to take advantage of a Health Savings Account.  A HDHP generally costs less than what traditional health care coverage costs, so the money you save on insurance can therefore be put into the Health Savings Account. 

You own and you control the money in your HSA.  Decisions on how to spend the money are made by you without relying on a third party or health insurer.

 First State Bank of Wyoming HSA's are interest bearing accounts with a rate of .35% and an Annual Percentage Yield of .35%We use the daily balance method to calculate the interest. You must maintain a minimum balance of $100.00 in the account each day to obtain the disclosed APY.  Interest is paid on balances over $100.00 and will be compounded daily and credited monthly. The funds are available for withdrawal penalty free at any time.  Withdrawals can be made by check, transfer to an existing checking account or conveniently through Online Bill Payment.   There is a one-time $25.00 set-up fee.  A dormant account fee of $2.00 per month is charged if the account is not used for 6 months, and the account balance falls below $100.00.  Variable interest rate may change at any time, rates effective 03/01/2016.
 
Tax advantaged contributions can be made in three ways:

1.  The individual or family can make tax deductible contributions to the HSA even if they do not itemize deductions;
2.  The individual's employer can make contributions that are not taxed to either the employer or the employee; and
3.  Employers sponsoring cafeteria plans can allow employees to contribute untaxed salary through salary reduction.

IRS Deductible & Out-Of-Pocket Limits for 2016 are as follows:


Individual PlanFamily Plan
Minimum Deductible$1,300.00$2,600.00
Maximum Out-of-Pocket$6,550.00$13,100.00

How Much Can You Contribute?

Individual Maximum Annual Contribution

 $3,350.00
Regardless of the deductible amount.

* If an individual does not stay in the HSA-eligible plan 12 months following the last month of the year of the first year of eligibility, the amount which could not have been contributed will be included in income and subject to a 10 percent additional tax.

Family Maximum  Annual Contribution

 $6,750.00
Regardless of the deductible amount.

*See above for exceptions

 Catch Up Contribution
 
If 55 or Older

 $1,000.00
If a spouse is 55 or older, a second account must be established and then a second catch-up contribution of $1,000 can be made.


To encourage saving for health expenses after retirement, individuals age 55 and older are allowed to make additional catch-up contributions to their HSAs.  Once an individual enrolls in Medicare they are no longer eligible to contribute to their HSA.   Amounts contributed to an HSA belong to the account holder and are completely portable.  Funds in the account can grow tax-free through investment earnings, just like an IRA.

Funds distributed from the HSA are not taxed if they are used to pay qualified medical expenses.  Unlike amounts in Flexible Spending Accounts that are forfeited if not used by the end of the year, unused funds remain available for use in later years.   When you turn 65, you can use the money for non-eligible medical expenses.  The money is subject to income tax, and there are no IRS penalties.  If you are under the age of 65 and use your money for non-eligible medical expenses, you will be subject to income tax and a 10% tax penalty.

If you are interested in more information or starting a Health Savings Account, please contact a Customer Service Represenative at 651-462-7611 and we will be glad to assist you!

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