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Health Savings Accounts

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What are HSAs?
Health Savings Accounts (HSAs) are tax-friendly savings accounts that allow you to build a fund for future medical expenses that insurance may not cover. The best part is, the account is all yours and any unused funds may be used to supplement your retirement savings.

Who is Eligible?
Anyone under 65 who is covered by a qualified High Deductible Health Plan (HDHP) and not another health insurance carrier or Medicare may be eligible to open an account. In addition, if you are claimed as a dependent by another person, you are not eligible to open an HSA.


  • HSA contributions are made with pre-tax monies, which means all contributions are tax-deductible.
  • Any interest earned on your account is tax-free.
  • Contributions may be made by you, your employer, or members of your family.
  • HSAs have a flexible contribution schedule allowing for a lump sum contribution or periodic payments at any time.
  • Funds may be rolled over each year.
  • Withdrawals to cover you, your spouse, or your dependents for any qualified medical expense are tax-free.
  • Leftover funds that are not used for medical purposes may be used to supplement your retirement savings.
  • Non-medical related withdrawals made before age 65 are subject to a 10% penalty. After age 65, any non-medical withdrawal will be penalty-free but no longer tax-free.

How do I set up my HSA?
Once you have elected and become enrolled in a high deductible health plan, you can open an H.S.A. with the Credit Union. Just make an appointment with one of our Financial Service Representatives and they will assist you with opening the account. If your employer contributes toward your plan deductible or offers direct deposit for your contributions, we can also help you make arrangements for that money to be deposited directly to your HSA.

Other Benefits:
  • You will save money through lower premiums and tax breaks.
  • Money deposited into your account may be used to pay your deductible or other out-of pocket medical expenses.
  • Spouses can inherit the account without any tax consequences.
  • You keep your account even if you change jobs, plans or retire.
Using Your HSA
You may use your HSA immediately or keep it for the future. Generally, access is allowed by check or withdrawal request either in person, over the phone, or through home banking.

For more information, including a complete list of IRS-allowable qualified medical expenses, please visit the “Forms and Publications” page on the IRS website at www.irs.gov; or call 1-800-829-3676 and request a copy of IRS Publication 502. For more detailed information on Health Savings Accounts you can also view IRS Publication 969 “Health Savings Accounts and Other Tax- Favored Health Plans”. Exceptions may apply for some insurance premiums that cannot be paid for by HSA funds even though they are listed in the IRS Publication 502. Over-the-counter medications are not listed, but are included under allowable qualified medical expenses for HSAs. Please consult your tax advisor regarding deductibility of expenses.
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