Health Savings Accounts

Health Savings Accounts (HSAs) were signed into law on December 8, 2003.

What is a Health Savings Account?

An HSA is money put in an account owned by an individual to pay for future medical expenses.

How does an HSA Work?

An HSA works like an IRA, except the money is used to pay for qualified health care costs. Money deposited to the account is tax deductible and is used to pay for current and future qualified medical expenses. Interest earned is tax deferred. Unused balances rollover from year to year.

Who can qualify?

Anyone with a high deductible health insurance plan is eligible for an HSA provided they are not covered by another health insurance plan, entitled to Medicare or can’t be claimed as a dependent on someone else’s tax return.

What is a high deductible insurance plan?

Limits Minimum Deductible Maximum Out of Pocket
2014 Single $1,250 $6,350
2014 Family $2,500 $12,700

What are the maximum contribution limits for 2014?

For single coverage, contributions are limited to the lesser of the high deductible amount or $3,300. If you are age 55 or older, you may contribute an additional $1,000. For family covered plans, contributions are limited to the lesser of the high deductible amount or $6,550. If you are age 55 or older, you may contribute an additional $1,000.

HSA Account Benefits

  • Save money on your taxes.1
  • Earn interest on your HSA balance.2
  • Unused funds accumulate tax deferred year after year for your future use.
  • Free custom checks.
  • Monthly bank statements plus images of your checks.
  • We handle IRS reporting of your contributions and distributions each year.
  • Receive all the benefits of Bank of The Valley’s HSA account for a minimal monthly service charge.3
Daily balance in HSA Checking Monthly Service Charge
$0-$499.99 $3.00
$500+ No charge

$10.00 new account setup charge

What are the tax benefits?

The three major tax benefits are:

  1. Cash contributions to an HSA are deductible from you federal gross income whether you itemize or not.
  2. Interest earned on your account accumulates tax deferred.
  3. Withdrawals from an HSA for qualified medical expenses are free from federal income tax. Non-medical withdrawals are considered taxable income and are subject to a 10% penalty.

How to Apply

Bank of The Valley is excited to offer Health Savings Accounts to our customers. The tax advantages and cost savings are significant with this IRS-approved savings plan. Here is how to get your HSA started.

First, apply for an HSA-eligible health insurance plan with your insurance agent or contact us if you need help locating an HSA Health Plan Provider.

Once your HSA high deductible health insurance plan is effective, you will complete our HSA Account Application and pay the one-time $10 new account setup charge. You can complete these steps at either of our two Bank of The Valley locations listed on the back of this brochure.

Bank of The Valley does not review distributions for eligibility so there is no filing claims with an administrator. Simply write your check from your HSA Checking Account and keep you medical receipts on file to substantiate your distributions to the IRS.4 After the end of the year, we will take care of the required reporting to the IRS. It’s that easy.

1Consult your tax advisor regarding the tax benefits of the HSA product. Health insurance policy must meet federal guidelines for use with an HSA product. 2Interest rate on HSA Checking Accounts may change at any time at the Bank's discretion. 3Overdrawing your HSA account may cause the plan to be disqualified by the IRS, and over­drafts are the sole responsibility of the account holder. An overdraft fee of $30.00 item will be charged, NSF fee charges apply to overdrafts created by check, in-person withdrawal, ATM withdrawal or other electronic means., 4Bank of The Valley accepts no responsibility for certifying distributions from the HSA account in accordance with IRS rulings. The account holder shall have full responsibility and shall indemnify and hold Bank of The Valley harmless for complying with federal laws and regulations including 26 USC Section 223 and specifically: (1) determining that the health insurance plan meets the definition of a High Deductible Health Plan; (2) the amount contributed does not exceed maximum limits; (3) determining that distributions for Qualified Medical Expenses are appropriate as set forth in 26 USC Sec­tion 213(d); and, (4) penalty for non-medical distributions.