The reason people open HSA accounts around tax season

March 21, 2019

Before you sit down with your tax consultant, consider opening a health savings account (HSA).

An HSA is a tax-exempt account that pays or reimburses certain medical expenses for an individual, his or her spouse and qualified dependents. To be eligible for an HSA, clients must be covered under a high deductible health plan.

Justin Horton with Collins Consulting, a TS Prosperity company, said qualified clients can set up an HSA now (until April 15) and reduce their taxable income for 2018.

Horton said one reason people use an HSA is in preparation for retirement.

“If you retire early, you are required to have health insurance until you’re 65, when you become Medicare eligible,” Horton said. “An HSA is a way to sock money away to bridge the gap as you go from working to reaching age 65.”

At The Bank of Tioga, you can set up an HSA with no set up or maintenance fees. Contributions are tax-deductible and interest is earned tax-free.* There’s automatic rollover, meaning you can carry balances over year-to-year – with interest, according to the American Bankers Association and it comes with a free debit card.

According to the ABA, the Internal Revenue Service sets the minimum deductible, maximum contribution and maximum out-of-pocket cost for HSAs each year. The maximum individual contribution for 2018 is $3,450 and for 2019 is $3,500. For families, the maximums are $6,900 and $7,000 for the two years, respectively.

To set up an account you will need your driver’s license, address (if different than your driver’s license, you will need proof of that address), your social security number, your date of birth and a deposit that meets your bank’s minimum amount required. It’s also important to think about who your beneficiary on this account will be. You will need their name, address, birthdate and social security number. You can also identify an authorized signer, however, a joint owner is not allowed.

Stop by either of The Bank of Tioga locations or call (70) 664-3388 (Tioga) or (701) 965-6633 (Crosby) to open an HSA.

*Please consult a tax advisor for your specific tax benefits. These are general statements and results may vary. Collins Consulting is an affiliate of The Bank of Tioga. Learn more about Collins Consulting on their website.