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Health Savings Account (HSA)

Start saving for health expenses and benefit from tax-free savings.

If you're concerned about the uncertainty of rising health care costs, First Bank and Trust's Health Savings Account (HSA) can help you address future expenses and remove some of the stress of paying for medical care. Our HSA builds your savings at a competitive rate while providing anytime access to your money. Contributions you and your employer make to your HSA are excluded from income tax, and any interest you earn is tax-free when used for qualified medical expenses. You must be enrolled in a High-Deductible Health Plan in order to open this account.

  • No balance requirement or monthly fee
  • No transaction fees or setup fees
  • Access money with a free HSA VISA® debit card
  • Manage your account and pay bills online
  • Optional check-writing privileges

We make it easy for our customers in Louisiana, Mississippi and Florida to build up savings in an HSA. You can make deposits through payroll deductions, by speaking with a banker or by transferring money from your other FBT accounts. We'll help you prepare for the future. If you need more information, read through our frequently asked questions.

Who is eligible for an HSA?

HSAs are available to individuals covered by a High-Deductible Health Plan (HDHP) regardless of whether they are self-employed or employed by an employer, and regardless of whether their employer maintains the HDHP.

You are an eligible individual for any month if you:

  • are covered under an HDHP on the first day of such month,
  • are not also covered by any other health plan that is not an HDHP (with limited exceptions),
  • are not enrolled in Medicare, and
  • are not eligible to be claimed as a dependent on another person’s tax return.

An employer may offer HSAs through a cafeteria plan. Employer contributions to an HSA reduce what an individual can contribute, but they do not eliminate an individual’s ability to contribute.

What are the benefits of an HSA?

HSAs can provide significant tax benefits. Not only can they provide tax benefits related to paying qualified medical expenses, they may also serve as additional income for retirement.

Tax Benefits

  • HSA contributions made by employer or employee are excluded from income
  • HSA earnings are tax-deferred
  • If used for qualified medical expenses, HSA assets are never taxed
  • Unused HSA assets may be used for retirement. Any distributed amounts used for retirement will be subject to income taxes. They will also be subject to a 10% penalty until the HSA owner turns age 65
  • Upon death, HSA assets become the property of a named beneficiary or of the HSA owner's estate

Non-qualified uses of HSA assets are subject to taxes and a 20% penalty unless the HSA owner is age 65 or older, dies, or is disabled.

What is an HDHP?

An HDHP is an insurance policy that meets certain dollar limits as shown in the table below. If the plan does not meet both the deducible and out-of-pocket expense restrictions, it is not considered an HDHP.

2018

Self-Only Coverage Family Coverage
Annual Deductible: $1,350 or more   Annual Deductible: $2,700 or more
Out-of-Pocket Expense: $6,650 or less   Out-of-Pocket Expense: $13,300 or less

What are qualified medical expenses?

For HSA assets to retain their tax-free status, they must be withdrawn and used for certain qualified medical expenses. Qualified medical expenses are generally expenses that qualify for the medical and dental income tax deductions as defined in IRS Publication 502. Expenses paid with HSA assets cannot also be claimed as a deduction on your income taxes. Here are some examples:

  • Medical expenses, including doctor visits, prescriptions, transportation to get medical care, and certain dental and vision care
  • Qualified long-term care insurance
  • Health plan premiums when unemployed
  • Health plan premiums during COBRA (continuation-of-benefit) coverage
  • Certain health insurance after age 65

Can self-employed individuals have an HSA?

Sole proprietors and others who are self-employed can have an HSA and are, in fact, often ideal candidates for an HSA. HSAs are often advantageous for self-employed individuals because:

  • HDHPs generally have modest premium costs, and may be an effective cost-containment mechanism,
  • The employer is protected against potentially catastrophic health care expenses, and
  • The HSA may serve the dual purpose of providing for both medical and retirement expenses.

How much can I contribute to an HSA?

The total amount you or your employer may contribute to an HSA is dependent upon whether you have individual or family coverage under an HDHP as shown in the table below. The contribution limit is dependent on the annual statutory limit set by the Treasury.

2018 HSA Contribution Limits

Self-Only Coverage   Family Coverage
$3,450   $6,900

In addition to the standard HSA contribution limit, if you have attained age 55 before the close of a taxable year, you may also contribute an additional amount known as a “catch-up” contribution, as shown in the table below.

Catch-Up Contribution Limits

Taxable Year   *Maximum Catch-up
2009 and beyond   $1,000

Do HSAs require reporting?

HSAs require the following government reporting:

  • HSA holders report contributions and distributions on their income tax returns
  • An employer contribution is reported on a business tax return, as well as on employees’ Form W-2s
  • Contributions and distributions are also reported to the IRS by the trustee or custodian where the HSA is held

*Maximum Catch-up applies to those 55 or older.
*Check with your tax advisor about eligible deductions