Tax Advantages, Flexibility & Long Term Savings.
Eligibility
Before you launch your HSA, take a look at your health insurance coverage. To contribute, you must be covered under an HSA-compatible high deductible health plan (HDHP). An HDHP generally requires that you pay out of pocket for medical expenses incurred (excluding certain preventive care expenses) until your deductible is met. Plan coverage kicks in after that.
An HDHP may be HSA-compatible if it satisfies the IRS’ annual deductible and out-of-pocket expense requirements. But the rules that define an HSA-compatible HDHP can be complicated so check with your insurance provider or employer to see if your health plan is HSA-compatible. HSA eligibility is determined as of the first day of each month.
In addition to having HSA-compatible HDHP coverage you:
- Cannot be covered by non-HDHP (with limited exceptions),
- Cannot be enrolled in Medicare, and
- Cannot be eligible to be claimed as a dependent on another person’s tax return.
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Plan and Contribution Limits
*High Deductible Health Plan Limits
Year | Self-Only Coverage | Family Coverage | |
|---|---|---|---|
Minimum annual deductible | |||
2024
| $1,600 | $3,200 | |
2025 | $1,650 | $3,300
| |
Maximum
Out-of-pocket
expenses | |||
2024
| $8,050
| $16,100 | |
2025 | $8,300 | $16,600 |
*HSA Contribution Limits
Contributions can be made in any amount throughout the year until your tax return due date (generally April 15) for that year, not to exceed your annual limit. Any contributions made on your behalf by your employer or anyone else are included in your one annual limit.
Year | Self-Only Coverage | If age 55 or older | Family Coverage | If age 55 or older |
|---|---|---|---|---|
2024 | $4,150
| $5,150
| $8,300 | $9,300
|
2025
| $4,300
| $5,300 | $8,550 | $9,550 |
*These limits are subject to annual cost-of-living adjustments
Tax Deduction
As your HSA contributions take off, don’t forget about that tax deduction. As long as you cannot be claimed as a dependent on another person’s tax return, you can deduct HSA contributions made by yourself and your spouse (not those made by your employer). Contact DMB Community Bank with questions about your HSA account
For more information, refer to IRS Publication 502 or consult with a competent tax advisor regarding your HSA deductions and how to claim tax-free HSA distributions. Contact DMB Community Bank with questions about your HSA account.
Tax-Free Distributions
When it’s time to take money out of your HSA, prepare for a smooth landing without tax or penalty. Simply use the money for qualified medical expenses. This generally includes most medical, dental, and vision care expenses not covered by insurance that are incurred by either you, your spouse, or any dependents.
HSA distributions not used for qualified medical expenses are subject to ordinary income tax and, if taken before age 65, a 20 percent IRS penalty tax (unless the distribution is because of death or disability).
Be sure to consult with a competent tax advisor regarding your HSA deductions and how to claim tax-free HSA distributions.
Distributions
Your HSA deposits are held in your name at DMB Community Bank. You, or an authorized signer, can make withdrawals (or distributions) for qualified expenses. You’re responsible for keeping receipts for all distributions from your HSA. The bank does not monitor how the funds are spent. Distributions can be made in any of the following ways:
- VISA Debit Card
- Personalized HSA Checks
- Online Bill Pay
- In-person Request
