Health Savings Accounts

Health Savings Accounts

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

What is a Health Savings Account?

An HSA is a type of checking account owned by an individual to pay for future qualified medical expenses.

How does an HSA work?

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 roll over from year to year.

Who can qualify?

Many people with a high deductible health insurance plan are 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. We encourage you to consult your tax advisor to see if this may be an appropriate account for you.

What is a high deductible insurance plan?

Plan Type           Minimum Deductible Maximum Out of Pocket Expenses
Single $1,600  $8,050
Family $3,200 $16,100

What are the maximum contribution limits for 2024?

For single coverage plans, contribution limits are $4,150. If you are age 55 or older, you may contribute an additional $1,000. For family coverage plans, contribution limits are $8,300. If you are age 55 or older, you may contribute an additional $1,000.

HSA Account Benefits

  • May save money on your taxes.1
  • Earn interest on your HSA balance.View our current rates.
  • 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 NO monthly service charge.3

What are the tax benefits?

  1. Contributions to an HSA are deductible from your 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.

Once your HSA high deductible health insurance plan is effective, you will complete our HSA Account Application. You can complete these steps at any of our full-service Bank of the Valley branch locations.

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 your 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 per 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.