A Health Savings Account is an account to save for future medical expenses. There are certain advantages in putting money into these accounts, including favorable tax treatment. Contributions to an HSA are deductible and distributions from a HSA are tax-free when used for qualified medical expenses. An individual can invest the assets as he/she wishes, and if the assets are not spent in a given year, the balance can be carried forward to a subsequent year. Unused funds are not lost at the end of the year.

• Adults can contribute to an HSA if they:
• Have coverage under an HSA-qualified “high deductible health plan” (HDHP).
• Are not also covered by any other health plan that is not an HDHP (other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted).
• Are not enrolled in Medicare.
• Cannot be claimed as a dependent on someone else’s tax return.

• No annual fees or administration fees.
• Check writing available.
• Debit card available.
• Payroll deduction available.
• No minimum balance to open.
• Minimum $500 balance to earn dividends. View current rate here.
• No overdraft privileges.
• NSF fees apply for any returned check or debit card transactions.
• Liberty FCU will allow authorized user of card/authorized signer on HSAs.
• All HSAs are federally insured by the NCUA up to the maximum limit.
• Online banking, electronic statements, electronic tax forms, and check images are available to HSA owners.
• You may invest reserve funds in an HSA certificate. Funds may not be used to cover any overdrafts on an HSA checking account while invested in a certificate. Certain restrictions apply.

An HDHP is health insurance that does not cover first dollar medical expenses. To qualify, federal law requires the following health insurance deductible minimums:

• $1,600 – Self-only coverage in 2024
• $3,200 – Family coverage in 2024

In addition, annual out-of-pocket expenses under the plan (including deductibles, co-pays, and co-insurance) cannot exceed:

• $8,050 – Self-only coverage in 2023
• $16,100 – Family coverage in 2023

Contributions to the HSA can be made by the individual, employer, or both. However, the total contributions are limited annually. Contributions can be made each year the individual is eligible. Contribution limits for 2024 are:

• $4,150 – Self-only coverage
• $8,300 – Family coverage

Individuals age 55 or older can also make additional “catch-up” contributions. The maximum annual catch-up contribution is as follows:

• 2023 & 2024 – $1,000

Contribution limits for 2023 are:

• $3,850 – Self-only coverage
• $7,750 – Family coverage

Money in the account can be used to pay for any “qualified medical expense” permitted under federal tax law. This includes most medical care and services, dental, and vision care.

The money in the account may pay for medical expenses of the individual, spouse, or dependent children. The account can be used to pay for expenses of a spouse and dependent children even if they are not covered by the HDHP.

Any amounts used for purposes other than to pay for “qualified medical expenses” are taxable as income and subject to an additional 20% tax penalty. Examples include:

Medical expenses that are not considered “qualified.”
Other types of health insurance unless specifically approved.
Medicare supplement insurance premiums.
Expenses which are not medical- or health-related.
After age 65, the 20% additional tax penalty no longer applies. If an individual becomes disabled and/or enrolled in Medicare, the account can be used for other purposes without paying the additional 20% penalty.