Can A Health Savings Account Save You Money?
Do you have a high deductible insurance plan? If so, you may be a good candidate for a Health Savings Account (HSA). What is an HSA? This account allows you to put away money and withdraw it tax free as long as you use it for qualified medical expenses.
To open an HSA, you must be covered by an HSA eligible insurance plan. With an HSA eligible plan, the monthly premium can be lower but you pay more for out-of-pocket healthcare costs before your insurance will start to pay its share.
What are qualified out-of-pocket medical expenses?
This would include things like doctor and emergency room visits, prescription drugs, ambulance services, chiropractic care, acupuncture, hospital care, surgery, and preventative care like flu shots and mammograms. It also covers hearing aids, first aid supplies, blood sugar test kits and insulin, dental cleanings, orthodontic treatments, crowns, bridges, eyes exams, prescription glasses, and home equipment for medical care such as ramps and bars as well as a host of other medical expenses.
What are the benefits of an HSA?
- You are not taxed on the money you save in your HSA and you don’t pay taxes on withdrawals for qualified medical expenses.
- Your money stays in the account until you use it. In other words, it will roll over next year if you don’t use it all.
- Change jobs? No problem. You can keep your HSA even if you retire or change jobs.
How much can I save in my HSA each year?
Contribution limits can change annually. In 2025, if you have coverage for yourself only, you can save up to $4,300. For family coverage, you can save up to $8,550.
Are there penalties for using these funds to pay for non-qualified expenses?
Yes. If you take money before age 65 to use on non-medical costs, you will pay the federal income tax on that amount as well as a twenty percent tax penalty.
If you take funds from your HSA after age 65 for use on non-medical costs, you will pay the federal income tax on that amount but will not pay a penalty.
Other things to know:
Keep all receipts for medical expenses you paid for using HSA withdrawals. You will need them to prove this money was only used to pay or reimburse qualified medical expenses if the IRS audits you.
If you enroll in any part of Medicare, you must stop contributing to your HSA. However, you may withdrawal existing savings from your account at any time to help pay for qualified medical expenses that Medicare does not cover.
Open a Health Savings Account at VCNB
At VCNB you will receive:
- Complimentary first box of checks
- Debit card
- Online account access
- Monthly statement (Set up electronic statements with VCNB and we will waive the $3 monthly account fee)
Ready to get started? Click here for more information or to open your account. You may also visit a VCNB location near you to open an account with one of our bankers.