Health Savings Accounts

What are the benefits of a Health Savings Account (HSA)?


Health Savings Accounts can provide significant tax benefits to eligible individuals. Not only can HSAs provide tax benefits related to paying qualified medical expenses, they may also provide benefits similar to many tax-favored retirement plans, including:

  • HSA contributions — by employer or employee — are excluded from income.
  • HSA earnings are tax-deferred.
  • If used for qualified medical expenses, HSA assets are never taxed.

Unused HSA assets may be used for retirement; however, effective 1-1-2011 they will be subject to a 20 percent penalty until the HSA account beneficiary turns age 65. If not used for medical expenses, they will be subject to income taxes.

Upon death, HSA assets become property of a named death beneficiary, or of the HSA account beneficiary's estate. A spouse may treat the assets as his or her own HSA, while non-spouse death beneficiaries must treat such assets as ordinary taxable income.

Your employer may designate a group set-up at ANB for all employee HSAs, helping streamline the contribution process for both you and your HR department.

Content — ©2011 BISYS Retirement Services

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