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Farmers Savings Bank


Health Savings Account for High-Deductible Health Plans

A health savings account (HSA) is a tax-advantaged account available to taxpayers who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an HSA are not subject to federal income tax. This helps individuals save for medical expenses while reducing their taxable income.

Who can contribute to an HSA?

If you are covered by a high-deductible health plan, you may contribute to an HSA, if you meet the following criteria:

  • You are not covered by any other health plan that is not an HDHP (except certain plans that provide specific limited types of coverage)
  • You are not enrolled in Medicare
  • You are not eligible to be claimed as a dependent on another person's tax return

Healthcare can be one of the largest expenses incurred for a family, and often come unexpectedly. As healthcare costs continue to rise, an HSA can help establish the discipline needed to save, as well as provide tax benefits for doing so.

If you are covered by a high-deductible health plan (HDHP), you may be eligible for an HSA! Take advantage of these very important tax advantages:

  • All contributions you make to your HSA are tax-deductible — regardless of your income level or whether you itemize deductions.
  • Your earnings are 100% tax-free while they are in your HSA, which makes for faster growth than a comparable taxable investment.
  • The money you take out to pay for qualified medical expenses is completely tax-free and penalty-free!

IMPORTANT! Tax rules can be complicated. The information on this page is intended to serve as a general overview. Before making any decisions, you should speak with a qualified tax advisor.