Are you looking for the best Health Savings Account (HSA) in Colorado?
HSA’s were only invented in 2004 but there are now nearly 40 million account holders across the US. Since 1889, PB&T Bank has offered banking with a personal touch to local communities throughout Colorado. We are proud to include HSA’s in our menu of personal savings options. In this article, you’ll learn about HSA requirements, how these accounts work, and the ways in which an HSA can benefit your life.
Who qualifies for an HSA?
According to IRS guidelines, to qualify for an HSA you must meet the following requirements:
- Enrolled in a high deductible health plan
- No other health coverage
- Not enrolled in Medicare
- Can’t be claimed as a dependent on someone else’s tax return
What is a high deductible health plan (HDHP)?
The IRS defines HDHPs as:
- Higher annual deductibles than the average health plan
- Limits on the annual deductible and out-of-pocket expenses
Read more about HDHPs on the IRS website.
How do HSA’s work?
If you meet the qualifications to open an HSA, there are certain restrictions on how/what you can use it for.
HSA’s also come with tax benefits: you can deposit pre-tax money in your HSA and you may be able to grow your balance with tax-free interest earned on your deposits. As of 2021, annual contributions are limited to $3,600 for individuals and $7,200 for families. An additional $1,000 catch-up contribution is permitted for individuals age 55 and older.
Once you reach age 65, you can use any remaining money in your HSA for retirement savings. Finally, spouses must maintain separate HSAs. You can’t have a joint HSA.
What can you use your HSA funds for?
Qualified withdrawals include medical expenses such as doctor visits, prescriptions, medical supplies, eye exams and contact lenses or glasses, lab tests, dental care, and more. Some “alternative” treatments such as acupuncture and chiropractor visits may also be covered. Check the complete list of qualifying medical expenses that comes with your Health Savings Account.
The CARES Act, signed into law in late March to provide Coronavirus relief to Americans, also extended qualifying medical expenses to over-the-counter medicine and menstrual care products. So you can use your HSA card at the drugstore to buy these types of products tax-free.
What are the benefits of an HSA?
HSA accounts come with many benefits for people in a variety of situations:
- Covers a wide spectrum of medical, dental, and mental health expenses.
- Contributions can come from the account holder, an employer, and anyone else, such as a parent or family member.
- Contributions are pre-tax dollars that are excluded from federal income tax. In Colorado, earnings growth and HSA withdrawals are also tax-exempt at the state level.
Can you use your HSA funds for your family?
The short answer is yes. While HSAs cannot be set up as joint accounts, you can use your HSA card for qualified medical expenses for yourself, your spouse, and any dependents you claim or could have claimed on your tax return.
Open your HSA at PB&T Bank today!
With only a $100 minimum opening deposit, no daily balance requirement, and no maintenance fees, PB&T makes it easy and convenient to open your HSA account today. Call us at 1-888-728-3550 to speak with a live member of our team or visit one of our locations to get started!