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Considering a high deductible health plan (HDHP)? If so, it’s important to also consider the advantages of a Health Savings Account (HSA).

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HSA accounts can be used as an effective tool to manage current and future healthcare costs.

Healthy Planning

HDHPs offer a lower cost premium per month, with a high-cost deductible. It is up to the individual to determine which insurance program and corresponding savings strategy is best for them. HSA accounts provide an avenue for tax-free savings in order to pay for day-to-day medical expenses such as doctors’ visits and prescriptions.
HSA accounts go beyond paying for immediate medical bills, they also provide a great way to build savings for your future. As a tax-advantaged account, many clients see it as a tool for additional retirement savings. When feasible, it is often advised to limit spending HSA contributions during working years in order to make the most of tax preferred benefits during retirement. Considering the rising cost of health care expenses and typical increase in required care later in life, having a health-care nest egg is advantageous for most individuals.
If you’re ready to move to a HDHP, be sure to plan ahead. Talk to our local experts about your SouthStar Bank HSA today! Click to book an appointment.
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SouthStar Bank HSA Details:

Note, it is the responsibility of the individual to track qualified expenses. With a debit card and free access to online banking, you can easily review charges.

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Qualifying for an HSA

HSAs are available to individuals who currently have a high-deductible insurance plan and no other health insurance. Individuals must not yet be enrolled in Medicare, or be claimed as a dependent on someone else’s tax return.

Individuals can contribute to HSA until enrolled in Medicare, even if unemployed or self-employed.

Pre-Tax Contributions and Earnings

Contributions to an HSA are typically made with pre-tax dollars through payroll deductions. Funds are not included in gross income, so they are not subject to federal income. In most states, including Texas, funds are not subject to state income taxes. Funds can also be added ad-hoc as a tax-deductible contribution. If you make contributions with after-tax dollars, it can be deducted from the gross income on your tax return and reduce your tax bill for the year.

As of 2024, there is a limit of $4,150 per individual or $8,300 per family per year contribution. Individuals can contribute to HSA until enrolled in Medicare, even if unemployed or self-employed. Any interest earned on the account is tax free.

Tax-Free Withdrawals

With a SouthStar Bank HSA Account, there are a variety of options to pay for qualified expenses, including:

  • HSA debit card
  • Online bill pay
  • Check
  • Self re-imbursement

Qualified expenses are tax free and include most medical expenses such as:¹

  • Doctor visits, including copays
  • Hospital charges
  • Prescriptions
  • Dental
  • Vision (including glasses and contacts)
  • Hearing aids
  • Physical therapy
  • In-home nursing or assisted living facilities
Note, HSA funds can be used to pay for medical expenses during retirement. As long as funds are used for qualified expenses, there is no tax penalty for making withdrawals. This differentiates the account from most tax-advantaged accounts such as a 401k or IRA. It is always advised to keep proper documentation of qualified expenses.

No Time Limit

In an HSA, funds do not have a fixed timeline, and will remain with the account owner if you change employers, change insurance, or retire. This differentiates the account drastically from a flex spending account which must be used under a specific timeline.

Plus, unlike a 401k or IRA, an HSA does not require the owner to begin utilizing funds at a certain age. Once you’re over age 65 and enrolled in Medicare, you can no-longer contribute to an HSA, but you can still use the funds for out-of-pocket medical expenses.

It is not required to take distributions in the same year that you pay for a particular medical expense. If you keep required documentation and the HSA account was established prior, you can reimburse yourself from the HSA account. As long as you use the money for qualifying health expenses, it remains tax free.

Frequently Asked Questions

In 2023, the individual contribution limit for an HSA account was $3,850. The family contribution was $7,750.

In 2024, the individual contribution limit for an HSA account is $4,150. The family contribution is $8,300.

If you are 55 years or over, an additional contribution for $1,000 per year can be made. Spouses wishing to both make additional contributions must have separate HSA accounts.

It is recommended to only spend HSA funds on qualified medical expenses. If funds must be used for non-qualifying expenses, a 20% tax penalty will apply. Once individuals reach age 65, non-qualified expenses are still taxable, but the 20% penalty does not apply.

For more details on qualified medical expenses, please visit

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