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Frequently Asked Questions about Health Savings Accounts (HSAs)

Q: Who is eligible for an HSA? 
A: An individual is eligible for an HSA under the following conditions:

  • Must be covered under a High-Deductible Health Plan (HDHP)
  • May not be covered by any health plan that is not an HDHP
  • May not be enrolled in Medicare Part A or Part B
  • May not be claimed as a dependent on another person’s tax return

Q: What are the benefi ts to having an HSA?

  • HSA earnings can accumulate tax-free
  • Qualified Medical Expenses are not taxed
  • Eligible contributions are excluded from income

Q: What type of health plan is considered an HDHP? 
A: A health plan is classified as an HDHP if the plan satisfies the following annual deductible and out-of-pocket expense requirements for single or family coverage:

 

Minimum Annual Deductible (2016)

Maximum Out-of-Pocket Expense (2016)

Single

$1,300

$6,550

Family

$2,600

$13,100

Q: Can self-employed individuals have an HSA? 
A: Sole proprietors and others who are self-employed can have an HSA and are, in fact, often ideal candidates for an HSA. In these situations, the business owner is both employer and employee. HSAs are often advantageous for the self-employed because:

  • High-deductible health insurance plans generally have modest premium costs and may be an effective cost-containment mechanism for the employer
  • The employer is protected against potentially catastrophic healthcare expenses
  • The HSA may serve the dual purpose of providing for both medical and retirement expenses.

Q: Can a self-insured medical reimbursement plan sponsored by an employer be an HDHP? 
A: Yes, as long as the medical reimbursement plan satisfies the HDHP requirements.

Q: Who can makecontributions to my HSA?
A: 
Contributions (up to the maximum annual contribution limit) may be made by the account owner, employer or eligible individual’s family members at any time.

Q: How do I make contributions to my HSA?
A: Contributions can be made through payroll deductions, in any Union Savings Bank branch or online.  Contributions being made this year for the previous year are required to be in writing using a Contribution Form. Please visit your local branch tocomplete a contribution form.

Q: How much can be contributed to my HSA in 2016?
A: Individuals with self-only coverage may contribute up to $3,350; for those with family
coverage the maximum is $6,750. Individuals who are age 55 or older may make an annual catch-up contribution ($1,000 for 2016), until he or she is enrolled in Medicare.

Q: Who is responsible for determining whether contributions to an HSA exceed themaximum annual limit?
A: You are. The annual contribution cannot exceed the plan deductible plus any catch-up contributions.

Q: How do I take a distribution from my account?
A: You may utilize your debit card, issue a check, use the bill pay service on USB online or visit your local branch to complete a withdrawal ticket..

Q: What are Qualified Medical Expenses?
A: They are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body.  Click to view a partial list of these eligible expenses. For more information refer to IRS Publication 502- Medical and Dental Expenses.

Q: How do I reimburse myself for qualified medical expenses that I paid from another account?
A:  You can be reimbursed by our USB online bill pay or your HSA debit card for cash at an ATM. Please note, per IRS Publication 969, expenses incurred before you established your HSA are not qualifi ed medical expenses.

Q: Can I withdraw my funds for purposes other than qualified medical expenses?
A: Non-Qualifi ed use of HSA assets may be subject to taxation and a 20% tax penalty. See IRS Publication 969 for further details..

Q: What happens if I overdraw my HSA?
A: An overdrawn balance in your HSA will be considered a Prohibited Transaction. Per IRS section 4975, if you engage in any prohibited transaction throughout the year, yourHSA ceases to be classifi ed as an HSA retroactive to January of the current year.This means all of your contributions and distributions made throughout the year will not be reported to the IRS as such. This may result in severe tax implications for you. To determine the tax implications of such changes, please contact your tax advisor.

Q: May I have a joint HSA with my spouse?
A: No. Health Savings Accounts are individual accounts having only one owner.   

Q: Who maintains the records to determine whether HSA distributions are used forqualified medical expenses?
A: You do. It is your responsibility to maintain sufficient records for these expenses.  Track your expenses easier with this HSA Expense Form.

Q: What do I do when I pay for a medical expense and later the doctor reimburses me?
A: To ensure proper IRS reporting, please visit your local Union Savings Bank branch to complete the required document and re-deposit the funds.

Q: What type of statements will I receive?
A: Statements of account activity - monthly.  5498SA - Annually (Annual Contributions).  1099SA - Annually (Annual Distribution).

Q: Must I deplete my HSA balance by the end of the year?
A: No. There is no time limit on when a distribution must occur. This allows you to build your account balance for the future.

Q: Are there any fees for my HSA?
A: Refer to our current Schedule of Deposit Account Charges.

Q: What are some of my responsibilities as the account owner?
A: Ensure your eligibility. Maintain records to support qualifi ed medical expenses. Adhere to the annual contribution limits. Report annual contributions & distributions to the IRS. (Form 8889)

Q: If I am no longer eligible for my HDHP, can I continue to utilize the balance in my account for medical reasons?
A: To ensure proper handling, contact your tax advisor. 

Q: Who do I call with additional questions?
A: Questions relating to your account activity please contact our Customer Service Center at 203-830-4200 or toll free at 866-872-1866. Questions relating to your insurance coverage please contact your employer. All tax inquiries should be referred to your tax advisor.