Health Savings Account
The 2020 limits for contributions are $3,550 for individuals and $7,100 for families.
A Health Savings Account (HSA) is a tax-exempt trust or custodial account established exclusively for the purpose of paying qualified medical expenses for beneficiaries covered under a qualified High Deductible Health Plan (HDHP). With an HSA, you can pay for current and future eligible medical, dental, and vision expenses. The funds can be withheld through payroll deduction, and therefore employees do not pay federal, state, or social security taxes. The employer also saves the matching FICA taxes.
In order to open an HSA, you:
Must be covered by a qualifying High Deductible Health Plan (HDHP).
Must not be covered by any other health plan that is not an HDHP.
Must not be enrolled in Medicare.
Must not be claimed as a dependent on another person’s tax return.
An HDHP costs less than traditional health care plans due to the higher deductible, so the money saved on premiums can be added to your HSA.
Accessing HSA Funds/Investments
You own and control the funds in your HSA. The money you contribute to your HSA is federally tax-deductible, whether or not you itemize deductions. Your funds can be conveniently accessed by a debit card to pay for medical expenses.
It conveniently helps the participant with cash flow
The card pays directly to the provider at the point of sale
It adds a convenience to accessing participant funds
HSA Banking Options
Rocky Mountain Reserve has partnered with two different banks and offers employers a choice of which will serve as the custodian for the actual HSA bank accounts. Avidia is a regional bank based in Massachusetts. UMB is a national bank with offices in Colorado.
Comprehensive online and mobile account access for participants and employers rounds out the RMR HSA solution. Through the web portal, smartphones, and tablets, participants are empowered to manage HSAs with access to interactive education, balances, funding capabilities, transaction and contribution history, investments, bill pay, statements, tax forms, and more. Employers are provided powerful self-service capabilities to perform account maintenance, funding, and reporting tasks.
Avidia Bank HSA
“Avidia Bank is an FDIC insured, a full-service financial institution located in Massachusetts, with a focus on Health Savings Account Administration. We offer big bank financial services at an affordable price with the personal attention provided by smaller financial institutions. We are a strategic partnership with leading technology vendors such as FIS and Alegeus. Avidia Bank is committed to its independent course in an industry increasingly dominated by large, impersonal organizations. Our size, combined with our strategic partners, allows for a scalable solution at an affordable price.”
Personal HSA Checks
You have the ability to receive a book of checks to access your funds in addition to the debit card. Checks can be used to make payments for services or pay participants back for expenses paid not using the HSA funds.
“UMB Healthcare Services, a division of UMB Financial Corporation, is a leading provider of health savings accounts and healthcare spending account cards with more than $1 billion in HSA assets. For the sixth straight year, UMB was ranked as one of America’s Best Banks by Forbes and SNL Financial. For over 100 years, UMB has made a commitment to principled and sound practices, we simply do not chase short-term earnings or growth at the expense of our future.
As a national leader in HSA Custodial Services, we offer fully integrated, fully customizable packages, as well as turn-key options. Our nationwide network of sales representatives work closely with our partners to meet your unique needs, creating entirely customized options to keep you on the leading edge of your industry.”
Important features of the plan
If you use the funds for expenses other than health care-related expenses, you must pay income tax plus a 20% penalty. Federal limits dictate how much can be contributed to an HSA each year. It also provides a $1,000 catch-up provision for individuals over age 55 (not enrolled in Medicare). After reaching age 65, the funds may also be used for non-medical related expenses. You will only have to pay income tax on the withdrawals at that point.
If you begin an HSA with an employer and you leave the employer, your funds are not lost and can move along with you. The difference is that you become responsible for the monthly fees to keep the account open and a new card/account will be created for you independent of the former employer.