Health Savings Accounts

HSA notebook, stethoscope and piggy bank

With the rising cost of healthcare, many employers are going
to high-deductible healthcare plans to help contain costs. This can leave
employees with more out of pocket expenses than ever.

Opening a Health Savings Account is one way to prepare for
extra healthcare expenses. Some employers will open them for their employees
and make regular contributions as a benefit. However, some people are on their
own when it comes to saving for medical expenses.

What is an HSA?

An HSA is a Health Savings Account, which can be paired with
a Qualifying High Deductible Health Plan (QHDHP.) This tax-free account can be
used to pay for certain medical expenses. The IRS has increased the HSA
contribution limits for 2020 to $3,550 per year for self-only and $7,100 for


  • Money is tax free – Contributions are pre-tax and come out the same way when using funds for qualifying medical expenses. These purchases can be made with a debit card connected to the account, check or ACH payment.
  • Earns interest – HSAs earn interest and unlike a regular savings account, the earnings are not considered taxable income.
  • Carry over balances – Unlike a Flexible Spending Account (FSA), HSA funds are not “use it or lose it”, meaning your balance can carry over from year-to-year and grow over time.
  • Can be invested – You may be eligible to invest your HSA in mutual funds, stocks and bonds, making it even more valuable.
  • Retirement funds – After age 65, you can withdrawal funds for any reason without penalty.

What are qualified expenses?

There is a long list of qualified expenses that the IRS sets
forth each year, but here are a few:

  • Health insurance plan deductibles, copays and coinsurance
  • Prescription drugs
  • Dental services, such as braces, crowns, bridges
  • Vision care, such as glasses and Lasik
  • Psychiatric treatment
  • Long term care

How do I open one?

First, check with your employer to see if they can offer you
one. If not, you can open one with Pennian Bank by stopping by any office location or giving us a call at 717-436-2144.

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