Health Savings Account - Avidia Bank
Why Enroll in an HSA?
Enroll in an HSA to start reducing your taxable gross income, spending pre-tax dollars for medical care and growing your HSA tax-free.
What is a Health Savings Account (HSA)?
An HSA is a tax-advantaged personal savings account that can be used to pay for medical, dental, vision and other qualified expenses now or later in life. To contribute to an HSA you must be enrolled in a qualified high-deductible health plan (HDHP) and your contributions are limited annually. You can use the money tax-free to pay for eligible expenses such as:
- Copays & Deductibles
- Prescriptions
- Dental Care
- Contacts & Eyeglasses
- Hearing aids
- Laser Eye Surgery
- Orthodontia
- Chiropractic Care
Since it is a savings account, you are encouraged to save more than you spend. Unlike FSA funds which are use-it-or-lose-it, your HSA balance rolls over from year-to-year earning interest along the way. The account is portable, meaning if you ever leave your employer, you can take the HSA with you because it’s your money and your account.
How can an HSA help secure my retirement?
Participation in a health savings account allows you to invest pre-tax dollars to prepare for your healthcare costs in retirement. Although your funds can be used to pay for immediate healthcare expenses tax-free, you can save the money for healthcare expenses later in life. You can continue to contribute year after year and withdrawals (provided you are enrolled in an HDHP) can be made at any point in time. Whether you withdraw the money tomorrow, five years from now, or in retirement, funds used for qualified healthcare expenses are always tax-free.
Examples of your potential savings over 25 years:
Contribution: $50 per month
Tax savings: $4,148
Balance: $22,532
Contribution: $200 per month
Tax savings: $16,590
Balance: $90,127
Contribution: $6,900 per year (max. contribution)
Tax savings: $47,696
Balance: $259,116
*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%, state tax rate of 5%, and 7.65% FICA. Balance calculations assume an average interest rate of 3%. Actual results may vary.
HSAs Offer a Triple Tax Advantage
Money goes in tax-free
Most employers offer a payroll deduction through a Section 125 Cafeteria Plan, allowing you to make contributions to your HSA on a pre-tax basis. The contribution is deposited into your HSA prior to taxes being applied to your paycheck, making your savings immediate. You can also contribute to your HSA post-tax and recognize the same tax savings by claiming the deduction when filing your annual taxes.
Money comes out tax-free
Eligible healthcare purchases can be made tax-free when you use your HSA. Purchases can be made directly from your HSA account, either by using your benefits debit card, online bill-pay, or check – or, you can pay out-of-pocket and then reimburse yourself from your HSA.
Earn interest, tax-free
The interest on HSA funds grows on a tax-free basis. And, unlike most savings accounts, interest earned on an HSA is not considered taxable income when the funds are used for eligible medical expenses.
When do you pay taxes on your HSA?
The only time you may pay taxes or penalties on your HSA funds is if you make a non-eligible purchase, or if you contribute more than the yearly maximum contribution limit. However, both circumstances can be corrected free of tax penalties by April 15th of the following calendar year.
Avidia Bank HSA Resources
Opt-Out of Paper Statements
As of 7/1/2021 Avidia Bank is charging $1.95 per quarter for mailed statements. If you do not want to incur this fee and are able to access statements through the WealthCare Portal, than you can opt-out of receiving mailed statements.
To opt-out: On the Personal Dashboard on your ABG Smart Mobile App, find the HSA Document Delivery Preferences. You can opt for electronic delivery only, for both Tax Forms and Statements.
Check Orders
You can order checks anywhere you wish. Please note if you use the order link below, you will receive 25 checks for $8.00.
Check Order (Order a checkbook to associate with your HSA)
Transfer Form (Transfer Existing HSA Funds to Avidia Bank)
Depending on the existing custodian, it could take up to 6 weeks before the Transfer Check is sent to Avidia Bank.
FAQs
HSAs are a great way to pay for medical care expenses on a pre-tax basis. HSAs are individually owned accounts that allow you to set aside pre-tax dollars to fund the account. Interest or dividends accumulate tax-free; and payment of qualified medical expenses has no additional tax consequences.
HSAs work hand-in-hand with high deductible health plans (HDHP). Individuals who make contributions to an HSA must be covered by an HDHP. The HDHP must satisfy minimum deductible amounts with certain out-of-pocket maximums. HSA account holders may not be covered by any other insurance plan that is not an HDHP or that covers benefits provided by the HDHP or below the deductible of the HDHP. There are exceptions for "permitted insurance" or "permitted coverage" products.
The benefits of an HSA are:
- 100% tax deductible
- Owned by the individual
- Portable, remaining with a employee regardless of employment
- Roll over from year to year and earn interest tax-free
- Can be invested, supplementing your retirement income
- The IRS Publication 502 outlines what IS and IS NOT an eligible medical expense for an HSA.
- Generally speaking, expenses are considered eligible if the medical care expenses are for the diagnosis, cure, mitigation, treatment or prevention of disease, and for treatments affecting any part or function of the body.
- The expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Expenses solely for cosmetic reasons generally are not expenses for medical care.
- Side Note: Section 213(d) shows what IS and IS NOT eligible. Please see IRS Publication 502, Medical and Dental Expenses, for a more detailed list.
Triple Tax Savings:
- Contributions are tax free
- Earnings are tax free
- Withdrawals are tax free when made for eligible medical care expenses
HSAs allow three kinds of tax-favored contributions:
- Employee contributions that are deductible over-the-line (i.e. deductible even by non-itemizers)
- Employer contributions that are excluded from income and employment taxes.
- Salary reduction contributions made through a Section 125 cafeteria plan.
All three forms of contributions are exempt from federal income taxes. Employer and salary reduction contributions (section 125 cafeteria plan) are exempt from FICA and FUTA as well.
Individuals who are covered by an HSA qualified high deductible health plan (HDHP) plan may participate in an HSA.
Eligibility is determined monthly as of the first day of the month. If an individual obtains HDHP coverage mid-month, eligibility for an HSA begins the first of the following month.
Yes. If the couple has family HDHP coverage, it is up to the two individuals to determine how to split the maximum contribution, whether it is divided equally or in some other manner.
IRS Revenue Ruling 2004-45 provides that an individual may participate in both an HSA and an FSA or HRA when the plan designs for the FSA and HRA are as follows:
Limited Purpose Health FSA or HRA
- The FSA and HRA are limited to reimburse only vision, dental or preventive expenses. In addition, the limited purpose HRA may also reimburse specified-disease insurance, indemnity insurance and long-term care insurance.
- Post-deductible Health FSA or HRA
- The FSA and HRA are limited to reimburse expenses only after the minimum required HDHP deductible has been satisfied. Under this arrangement, the Post-deductible Health FSA and HRA are not required to have the same deductible as the HSA. The deductible need only be the minimum required HDHP deductible. For example, an individual who has single HDHP coverage with a $1,500 deductible may set up an FSA with a $1,000 deductible as this is the minimum required in 2004 under the regulations.
- Retiree HRA
- Reimbursement from the HRA begins after an employee retires from employment. Contributions are made to the HRA during the employee's active employment.
HSA Online Deposit and Disclosure Agreements
Electronic Records Disclosure and Agreement
Privacy Disclosure
Authorized Signer
Beneficiary Form
Contribution Correction Form
Distribution Reversal Form
Contribution Change Form (to change per pay period contributions)
Change Form (including beneficiaries, authorized signer, and demographics)
Individual Contribution Form (to transfer money to your HSA)
Account Closure Form
Death Distribution Form
Avidia Bank Fees
Reactivate Dormant HSA Bank Account