Health Savings Account (HSA)
What is an HSA?
A Health Savings Account (HSA) is a specialized savings account that works hand in hand with your employer-sponsored high deductible health insurance plan (HDHP), allowing greater flexibility over how you use your health care dollars.
How does an HSA work?
Qualified individuals may open an HSA at Busey and make pre-tax contributions to the account that grow in the same manner as an IRA. Distributions are tax-free if the proceeds are used for qualified medical expenses.
How do I benefit?
Withdrawals can be made for medical expenses tax-free. After age 65, funds may be withdrawn for any reason without penalty, and medical expense withdrawals continue to remain tax-free.
- Individuals who participate in High Deductible Health Plans (HDHPs)
- Individuals who are not currently covered by any non-HDHP
- An individual who is not currently enrolled in Medicare or claimed as a dependent on someone else's tax return
Did you know?
- Funds roll over year to year
- HSAs are portable
- Employers can save on health care costs
- HSAs allow greater flexibility over how you use your health care dollars
- By law, you must enroll in an HDHP to be eligible for an HSA
Qualified medical expenses include items such as:
- Dental treatments such as fillings or braces
- Hearing aids, including batteries
- Prescription drugs
- Over-the-counter (OTC) drugs (accompanied by a prescription)
- Eye exams, eyeglasses and contact lenses
- Premiums for qualified long-term care insurance
- Out-of-pocket expenses including deductibles, co-insurance and co-payments
Individuals who establish HSAs should maintain records of medical expenses to show distributions have been made exclusively for qualified medical expenses should the IRS request them.
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