Health Savings Accounts (HSAs) were created by Congress to help fight rising medical costs by providing an incentive for consumers to pay the “first-dollar” of medical expenses. An HSA account is designed exclusively for qualified medical expenses incurred by the HSA account holder and his/her covered dependents.

Significant tax benefits are provided to individuals with HSAs. HSA’s also provide tax benefits related to paying qualified medical expenses and can provide benefits similar to many tax-favored retirements plans. A summary of HSA tax advantages is listed below.

Tax Benefits
- HSA contributions (by employer or employee) are tax deductible
- HSA earnings are tax-deferred
- HSA assets are never taxed if used for qualified medical expenses
- Unused HSA assets may rollover year to year and accumulate for retirement

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

YOU ARE ELIGIBLE IF:
- You are covered under a High-Deductible Health Plan (HDHP) on the first day of such month
- You are not also covered by any other health plan that is not an HDHP (with limited exceptions)
- You are not enrolled in Medicare
- You cannot be claimed as a dependent on another person’s tax return.

The total amount you or your employer may contribute to an HSA for any taxable year is dependent upon whether you have individual or family coverage under a high deductible health plan. In addition to the standard HSA contribution limit shown above, if you are age 55 before the close of a taxable year, you may also contribute an additional amount known as a “catch-up” contribution. Consult your Health Insurance Professional and Tax Advisor for this information.

You can access your money in an HSA by opening a specific checking account. Aroostook Savings & Loan HSA checking accounts offer the following features:

- Interest based on account balance
- Debit card and/or Checks
- Online Home Banking
- Phone Home Banking
- Monthly account statement
- Rollovers & transfers

You can withdraw money from your HSA to pay for your qualified expenses (including your deductible, prescription drug expenses, co-pays and coinsurance payments). Or you can choose to pay out of pocket and save your HSA to help pay for future health-related expenses, COBRA premiums, long-term care insurance premiums or certain retiree health expenses. (Effective January 2013. Subject to IRS rules.) 

Aroostook Savings & Loan will ensure you are provided with all necessary tax documents for your filing purposes.

Sole proprietors and others who are self-employed may have an HSA. Self-employed people are often ideal candidates for an HSA. HSAs are advantageous for the self-employed because:

- High-deductible health insurance plans generally have modest premium costs and may be an effective cost containment mechanism for the self-employed or insured
- The insured employer is protected against potentially catastrophic healthcare expenses
- The HSA may serve the dual purpose of providing for both medical and retirement expenses

Are you an employer?

Does your company have a high deductible plan?  You may want to consider contributing to an Aroostook Savings & Loan Health Savings Account (HSA).
Health Savings Accounts (HSA) are designed to reduce insurance costs for both employers and employees.  If you are considering offering an HSA as part of your employee benefits plan, here are some additional benefits you will realize.

Lower insurance costs - Switching to an HSA-qualified high-deductible health plan should reduce your insurance premiums.  In addition, rather than paying 100 percent of insurance dollars towards premiums, an HSA allows you to distribute some of these funds directly to your employees by making contributions to their accounts.

Offer a more diverse benefits package - Including HSAs in your benefits plan can enhance your benefits package and aid in attracting and retaining key employees.

You can reduce you and your employees’ taxes - Contributions you make to your employees’ Health Savings Accounts are made with pre-tax dollars and will reduce your employee’s taxable income. Both employees and employers can contribute to an HSA. There are individual and family annual contribution limits. HSAs grow in the same tax-deferred manner as IRAs. The funds can be used to pay for qualified medical expenses on a tax-free basis. After the age of 65, HSA funds can be used to be for anything and the employee only pays income tax on the funds removed.

Minimize administrative costs - Employees own and administer their own HSAs, so there are minimal administrative and compliance issues for employers.  

Share the cost of health care benefits and give ownership to employees - An HSA gives your employees the ability to build a savings account with tax benefits and employees who own an HSA are more likely to be engaged consumers who ask about costs prior to making appointments, seek information about generic prescription alternatives and select lower cost treatment. HSAs are a great way to motivate your employees to take a vested interest in their health care choices and expenditures — a win-win for all.

At Aroostook Savings & Loan, we believe it’s important to help you and your employees effectively manage rising health care costs.  That’s why we offer the Aroostook Savings & Loan Health Savings Account.  It’s a tax-smart way for employees to save for qualified medical expenses that make sense now and later.  Aroostook Savings & Loan is ready to help you and your employees to invest and save for your future. Come visit us today!