Health Savings Accounts

Get the upper hand on life's surprises.

Let’s face it, the cost of healthcare is high but don’t put your well-being on the backburner if medical expenses keep you up at night. A CoastHills Health Savings Account (HSA) is an easy way to save for qualified medical expenses, including doctor visits, prescriptions and more.

Whether you're planning for the future or for the now, a CoastHills Health Savings Account can prepare you for some of life's surprises.

What is an HSA?

Like an Individual Retirement Account (IRA), HSAs are savings accounts that let you set aside pre-tax or tax-deductible funds to pay for qualified medical expenses. Account balances earn dividends and access to your funds is easy with a CoastHills HSA Visa debit card or CoastHills HSA checks.

How do I qualify for an HSA?

To qualify for an HSA, you must be enrolled in a High Deductible Health Plan (HDHP) as your only health insurance plan, and you must not be eligible for Medicare or be claimed as a dependent on someone else’s tax return. However, not all HDHP plans qualify for HSAs so be sure to check with the insurer of your plan that it is “HSA-eligible” before you buy.

HSA eligibility is determined as of the first day of each month.

What are some HSA eligible expenses?

While withdrawals from your HSA are tax-free, the government only allows this tax advantage if you use your HSA funds for qualified medical expenses. This includes deductibles, copays, prescriptions, imaging, medical services, equipment, and supplies. Some generally eligible expenses also include hearing aids, counseling, chiropractic services, eyeglasses, physical therapy and more. For the most up-to-date list, please visit IRS.gov.

Advantages:

With an HSA, you can get triple tax benefits* where, your contributions are tax-deductible, your funds grow tax-deferred, and withdrawals aren’t taxed when used for qualified medical expenses. Plus, use your funds to help cover the medical expenses of anyone you claim on your taxes, even if they aren’t covered under your health insurance plan. A great way to plan for unexpected medical expenses for the whole family.

Another great benefit is that you don’t have to spend the money, any balance unspent will roll over from year to year so you can build up a healthy savings account into retirement. Once you’re over the age of 65 and enrolled in Medicare, you can no longer contribute to your HSA, but you can still use the money for out-of-pocket medical expenses.

Disadvantages:

To open an HSA, you must have a HDHP, and you can only use HSA funds for qualified medical expenses. If you accidentally use the funds for a non-qualified expense, you will have to report it on your annual income tax and pay tax on it. If you’re under the age of 65 and use the funds for a non-qualified expense, you will also pay a 20% penalty on top of the income tax. Be very careful not to use your HSA funds on non-qualified expenses.

How to make the most of your HSA.

Each year, the IRS releases the annual HSA contribution limit for both individuals and families. The key to maximizing your account is to make the full contribution every year. For tax purposes, you generally have until the tax filing deadline to make a contribution.

To open a Health Savings Account, stop by any of our 12 local branches or call (805) 733-7600. Find more tools and tips to make the most of your HSA through the CoastHills Financial Wellness Center.

*Please consult your tax advisor.