Health Savings Account

What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a tax-free checking account created by the U.S. Government to help American families with health care costs.  HSAs are available at Wadena State Bank.  The WSB Health Savings Account allows individual coverage under a qualified high-deductible health plan to make tax deductible contributions into an HSA and then use the funds tax-free to pay for out-of-pocket medical expenses.

Benefits of an HSA

• Contributions are tax deductible
• Interest earned in an HSA grows tax-free
• Money invested in an HSA carries over from year to year
• If the individual changes jobs, the HSA goes with the individual
• HSAs help make health care affordable

Eligibility Qualifications for an HSA

• Must be covered under a qualified high-deductible health plan
• The annual deductible must be at least $1,000 for individual coverage, and least $2,000 for family coverage
• Not covered under another type of health plan
• Not entitled to Medicare benefits (must be under 65)
• Not claimed as a dependent on another person’s tax return

Contribution Requirements to an HSA

• Can annually contribute up to the amount of the policy’s annual deductible, subject to a cap of $2,650 for individuals and $5,250 for families in 2005.  These amounts will be increased for inflation in future years.
• In addition, individuals over age 55 can make additional catch-up contributions each year until they enroll in Medicare.  The amount of the additional catch up amount is based on the following schedule:

-          2004-$500

-          2005-$600

-          2006-$700

-          2007-$800

-          2008-$900

-          2009 and after $1,000

Distributions from an HSA

• Distributions are not taxable as long as they are used to pay for qualified medical expenses such as:

-          Prescription drugs

-          Over the counter drugs

-          Doctor’s office or hospital visits

-          Vision care

-          Dental work

-          Long-term care insurance premiums

-          COBRA premiums

-          Health insurance premiums during any period of unemployment

Wadena State Bank HSA Account - Fees & Services

• Interest bearing safekeeping account
• Service Fee: $2.25/mo. (Waived on balances of $3,000 or more)
• Setup fee: $25
• Close account fee: $25
• Distributions by withdrawal form: $3
• No overdraft privilege service
• $1.50 charge per ATM withdrawal (Wadena State Bank machines excluded)
• First 50 checks at no charge
• Online Banking account access
• Phone Banking account access
• Wire transfer/stop pay fees: same as existing fees

**  Other investment services available through LPL Financial Services.  LPL Financial Services is located within Wadena State Bank.

Interest Rate Tiers (please call for current rates)

• Balance under $1,000.00                         
• $1,000.00-$4,999.00                  
• $5,000.00-$14,999.00                
• $15,000.00 +                            

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