Health Savings Account

What is a Health Savings Account?

A Health Savings Account allows you to pay for current health expenses and save for future qualified medical expenses on a tax-free basis.  Any unused funds at the end of the plan year may stay in the account and continue to earn interest.  Once you reach age 65, any remaining funds can be withdrawn without tax penalty.

Who is eligible for a Health Savings Account?

In order to own a Health Savings Account, you must be covered by a Qualified High Deductible Health Plan (HDHP).  An HDHP typically costs less than a traditional insurance policy thus allowing you to invest the cost savings.  You cannot be enrolled in Medicare, be claimed as a dependent on someone else’s tax return or have other “first-dollar” medical coverage.

What are the tax advantages of a Health Savings Account?

A Health Savings Account provides you triple tax savings!

1. Tax deductions when you contribute to your account.
2. Tax-free earnings on the investment.
3. Tax-free withdrawals for qualified medical expenses. 

How do I contribute to my account?

You can make deposits to your account just as you would any other bank account including deposits in person, transfers from another SBPC account, or direct deposits through payroll.  Your employer may even make deposits to your account on your behalf.  As with traditional IRA’s, you can make prior year contributions up to April 15th.

How much can I contribute to a Health Savings Account?

The amount you may contribute depends on the dollar amount of your deductible.  If you have an $1100 deductible for example, you would be able to contribute $1100 to your account as long as you had the high deductible health plan for the entire year.  Otherwise the contribution must be pro-rated.  The amounts change each year.

How do I use the funds in my Health Savings Account?

Your Health Savings Account will work just like a checking account.  You can make purchases for qualified medical expenses using a debit card or checks.  It is your responsibility to keep records of your expenditures.  Once your plan year has ended, you are able to “rollover” the excess funds to be used whenever you like.

At the State Bank of Pearl City, our Health Savings Accounts are totally free!

• FREE Debit card
• FREE Online Banking Access and Bill Payment
• FREE Monthly Statements
• Tiered-rate checking account
• No monthly fee

Come on in or give Scott Helms a call and let us show you how a Health Savings Account from the State Bank of Pearl City might be just what the doctor ordered!