Health Savings Account

At M&F Bank, we want to help curb your medical costs. We offer Health Savings accounts (HSAs) to individuals, Third Party Administrators (TPAs), agents, brokers & employers as a solution. With lower fees, a wide selection of service options, and our experience with custodial accounts, our range of benefits sets us apart as your preferred HSA provider.

What is a health savings account?

A Health Savings Account (HSA) is a specialized personal savings account with valuable tax advantages, empowering individuals to allocate pre-tax income specifically for healthcare expenditures. In contrast to medical flex plans, HSAs provide the benefit of earning interest, deferring taxes, and rolling over any unspent funds to the following year.

HSAs cater to individuals with high deductible health plans, offering flexibility and a diverse scope of usage. Account holders can allocate HSA funds towards various health-related expenses, including eyewear, non-prescription medications, therapy, medical equipment, diagnostic tests, and more.

How does a health savings account work?

An HSA works in conjunction with high-deductible health insurance. You can use your HSA money to help pay the health insurance deductible and any qualified medical expenses, including those not covered by the health insurance, like dental and vision care. Any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate, plus a 20% tax penalty.

Once you meet your calendar-year deductible, the health insurance pays the remaining covered expenses following the terms and conditions of your particular plan. Some plans pay 100% of covered costs after the calendar-year deductible is met.

Health savings account vs. FSA: what’s the difference?

A Health Savings Account (HSA) is a tax-advantaged savings account aligned with high-deductible health plans, allowing pre-tax income allocation for qualified medical expenses with a triple tax advantage. This encompasses tax-free contributions, growth, and withdrawals for medical expenses, with the flexibility of fund rollover.

On the other hand, a Flexible Spending Account (FSA) is a tax-advantaged account for medical costs, funded with pre-tax dollars, and usable for eligible expenses; however, many FSAs have a “use-it-or-lose-it” policy at the plan year’s end, although specific plans may offer grace periods or carryover options.

Choosing between an HSA and an FSA depends on factors such as your healthcare plan, financial goals, and spending habits. Whether you’re seeking long-term savings potential or prefer more immediate access to funds, our team at M&F Bank is here to guide you through the decision-making process.

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Health Savings Account Benefits

HSAs can help curb medical costs, reduce taxable income, and even plan for retirement income. Here are some of the numerous advantages that contribute to overall financial well-being:

Triple Tax Advantage

Tax-free contributions: Contribute pre-tax dollars to your HSA through employer payroll deductions, reducing your gross income and federal income tax liability. Most states also exempt contributions from state income taxes.
Tax-free gains: Any interest or earnings accrued within the account remain tax-free.
Tax-free withdrawals: Utilize your HSA funds for qualified medical expenses without incurring federal (and often state) taxes on withdrawals

Customizable Control

Decide the amount you wish to allocate to your HSA, up to the IRS contribution limit, and choose which qualified expenses to cover with these funds.

Seamless Transitions

Your HSA funds remain accessible even if you switch health insurance plans, change employers, or embark on retirement. The funds are evergreen and can be utilized for qualified expenses throughout your lifetime.

Yearly Carryover

Any unused balance at the end of the year seamlessly carries over, ensuring you never lose your hard-earned funds.

How to Open a Health Savings Account

The initial step to opening a health savings account is determining your eligibility. Qualifying for an HSA entails the following criteria:

You already have a qualified high-deductible health insurance plan.
You do not possess coverage under any other health insurance.
You are not currently enrolled in Medicare.
No other individual claims you as a dependent.

Exceptions to the above include health insurance coverage for accidents, dental care, disability, long-term care, and vision care, which do not hinder your eligibility. Permissible coverage includes workers’ compensation, specified disease, and fixed indemnity coverage.

At M&F Bank, we want to empower you to take charge of your healthcare finances. With our streamlined process, opening an HSA has never been easier. Please get in touch with one of our branches today to embark on this journey toward financial wellness and medical security. Your medical costs and future self will thank you.