A Health Savings Account (HSA) is a tax-advantaged savings account that helps you save and pay for qualified out-of-pocket medical expenses.
Anyone who is eligible can open an HSA, regardless of income. An HSA owner must be:
- Covered under a High Deductible Health Plan (HDHP)
- Not covered by any other health plan
- Not enrolled in Medicare
- Not be claimed as a dependent on another person's tax return
What is a High Deductible Health Plan (HDHP)?
An HDHP is a medical insurance plan with a minimum annual deductible and a maximum out-of-pocket expense cap. If you have an HDHP, you may pay a lower monthly premium but have a higher deductible (meaning you pay for more of your health care items and services before the insurance plan pays).
Deductible and out-of-pocket expense limits may be adjusted annually to account for cost-of-living increases.
HDHP Minimum Annual Deductible
Maximum Out-of-Pocket Expense Cap
How does a Health Savings Account benefit me?
An HSA works in conjunction with an HDHP to offer benefits such as:
- Tax-deductible contributions
- Tax-free distributions for qualified medical expenses
- Unused HSA funds remain in the HSA account for your future use
- Payment for qualified medical expenses for you, your spouse and your dependents
What’s considered a qualified HSA distribution?
You can use your HSA to pay for doctor visits, prescription drugs or over-the-counter medicines prescribed by a doctor for you, your spouse and your dependents. For a complete list of qualified HSA distributions, visit www.irs.gov and view publication 969 and publication 502.
HSAs can have tax consequences for nonqualified distributions. Consult a tax or financial advisor for additional information about how nonqualified distributions could affect your taxes.
Can I roll over my HSA?
All or any portion of funds withdrawn from an HSA can be deposited back to an HSA as a rollover contribution according to the following rules:
- Rollovers are not subject to the annual contribution limits; however, you can make only one rollover within a 12-month period.
- To qualify as a rollover and avoid a tax penalty, withdrawn funds must be re-deposited within 60 calendar days.
How do I transfer my HSA to another HSA account?
All or any portions of the funds in an HSA can be transferred directly to another HSA tax-free. Transfers are made from custodian to custodian, so there are no tax penalties.
Are there HSA contribution limits?
Health savings account contribution limits are based on your plan type. Contributions for the current year can be made until April 15 of the following year.
If you’re age 55 or older by the end of the tax year, you can increase your contribution limit up to $1,000 a year. This extra amount is the catch-up contribution allowed for HSAs. Contribution limits are indexed for inflation and can change annually.
Maximum Out-of-Pocket Expense Cap
Not an LGFCU member? You can still open an HSA with us.
You can still open an LGFCU HSA through your employer, even if you're not a member with us.
The LGFCU HSA has no monthly service charge or maintenance fee. There's no deadline to take money out of the account, and no minimum deposit or balance is required to earn dividends on the account. The dividend rate is determined by the LGFCU Board of Directors and is subject to change daily.
As a Health Savings Account holder, you’ll receive information about our full range of products, services and member benefits. However, in order to take advantage of these other benefits, you must also open an LGFCU Share Account.
For full LGFCU benefits in addition to your HSA, learn more about how to join.