Health Savings Account

What is a Health Savings Account?
A Health Savings Account, more commonly known as an HSA, is an account established exclusively for the purpose of paying or reimbursing qualified medical expenses for you, your spouse, and your dependents, tax-free. These expenses include medical, dental, vision & other qualified expenses.

An HSA provides the insured with a way to pay for medical expenses tax-free. It also provides a way for individuals to pay for expenses that may not be paid for by a medical plan (i.e. dental, vision, over the counter medications) on a tax-free basis.

An HSA is individually owned and controlled entirely by an individual/employee. All funds invested in an HSA remain the property of the account owner. Account balances roll over from year to year and accumulate tax deferred. Distributions from your HSA for qualified medical expenses are tax-free.

Am I Eligible for an HSA?
To be eligible for an HSA, an individual must:
• Be under the age of 65
• Be covered under a High Deductible Health Plan (HDHP)
• Not be covered by any other health plan that is not an HDHP (with certain exceptions for plans providing certain limited types of coverage)
• Not be enrolled in Medicare
• Not be claimed as a dependent on another person’s tax return

What is a High Deductible Health Plan (HDHP)?
A High Deductible Health Plan (HDHP) is a plan that has an annual minimun deductable and a maximum annual out-of-pocket for single and family coverage. These ammounts may change annually; please ask a CSB Account Relationship Specialist for the current deductable and out-of-pocket limits.

Who Can Contribute?
• Contributions can be made by either the individual/employee, the employer, or both.
• Contributions can also be made by someone else on behalf of the individual/employee.

CONTRIBUTION RULES
• Contributions must be made in cash, check, or direct deposit.
• Contributions must cease once individual is enrolled in Medicare.
• Contributions can be made through an Employer’s Section 125 Plan.
• For self-employed individuals, contributions may be tax-deductible.
• Contributions can be made by an employee through a cafeteria plan (Sec. 125).
• Employer contributions cannot be discriminatory.
• Contributions for a given tax year may be made prior to April 15 of the following year.
• Excess contributions are not tax deductible, and will have an excise tax of 6%.
• Contributions are tax deductible – Contributions made by anyone other than your employer are deductible regardless of whether you itemize deductions. However, you cannot also deduct the contributions as medical expense deductions.

Consult with your tax or legal professional for guidance.

How Can I Contribute to My HSA?
•Individuals can fund their HSA by making contributions in person, through an ATM, Internet Banking, or automatic transfer.
• Employees can fund on a regular basis through payroll deduction if offered by their employer.
• Employers can fund their employees’ HSA.
• Rollovers are allowed from an Archer Medical Savings Account or other HSA, although they are generally NOT permitted from a Flexible Spending Account or Health Reimbursement Account. Rollovers are not subject to contribution limits.

Consult with your tax or legal professional for guidance.

How Do I Pay My Bills?
• Your CSB HSA provides you the flexibility to pay by check or debit card.
• You may also choose to pay online by using Xpress BillPay service at www.csb1.com.
• Medical expenses can be paid “out of pocket” and later reimbursed to you from your HSA.

Consult with your tax or legal professional for guidance.

Determining Your Contribution
Individuals who are eligible on the first day of the last month of the taxable year (December for most taxpayers) are allowed the full annual contribution (plus catch-up contribution, if 55 or older by year end), regardless of the number of months the individual was an eligible individual in the year. For those who are no longer eligible individuals on that date, both the HSA contribution and catch-up contribution apply pro rata based on the number of months of the year a taxpayer is an eligible individual.

How Do Distributions Work

• A distribution is tax-free if used for “qualified medical expenses,” including medical, dental, vision, and over the counter medications.
• To determine if your expense is a qualified medical expense, you may refer to:
http://www.irs.gov/pub/irs-pdf/p502.pdf
• If a distribution is due to death and the beneficiary is the spouse of the HSA owner, the spouse becomes the owner of the HSA. The HSA ceases to exist for all other beneficiaries.
• Distributions for non-qualified expenses are taxable, included in gross income for tax purposes, and assessed an additional 10% penalty.
• At age 65, distributions for non-qualified medical expenses will be taxed as ordinary income, however no additional 10% penalty is incurred.

DISTRIBUTIONS CAN BE TAKEN TAX-FREE FOR:
– Individuals covered by HDHP
– Spouse of individual
– Dependent of individual
(Spouse and dependent do not need to be covered by HDHP.)

Consult with your tax or legal professional for guidance.

What if I Don’t Use All of My HSA Funds in a Year?
Any unused balance remaining in your HSA at the end of a year can be used in future years. You will never lose the funds contributed, but rather they carry-over from year to year.

What Happens When I Turn 65?
At age 65, you will no longer be permitted to make contributions to your HSA. However, you will be able to keep any remaining balance in your HSA for a number of different expenses:
• Out-of-pocket health expenses
• Retiree health insurance premiums
• Medicare premiums, deductibles, and co-payments

Who is Responsible for Verifying That Distributions are Used for a Qualified Medical Expense?
You, as the HSA owner, are responsible. Participants in an HSA need to become excellent “receipt keepers” as you are responsible for providing proof to the Internal Revenue Service should they request it. We strongly encourage you to keep your records regarding your HSA in order.

What Are The Benefits of Opening an HSA at CSB?
Your HSA account at CSB will be a checking account, giving you easy access to your funds. Some of the features an HSA at CSB has to offer:

• Our HSA checking account offers a tiered interest rate tied to the balance in your account. Interest is paid to the account on a monthly basis, helping you to earn the maximum rate possible. The earnings on your account are 100% free from federal income tax while they remain in the HSA.
• Paying medical expenses is effortless with your CSB HSA debit card.

Up to two free HSA debit cards can be issued, one of which can be used by an authorized signer designated by you.

• If you prefer to write checks, we will pay the printing cost for the first 25. Your checks will have “Health Savings Account” printed on them for easy record keeping.
• Free access to your account via Xpress Net Banking at www.csb1.com.
• Free BillPay service for your HSA through www.csb1.com.
• Contributions can be made in several simple, convenient ways:

– Transfer through CSB’s Xpress Phone Banking 330-674-2720 / 888-438-2720
– Transfer through CSB’s Xpress Net Banking at www.csb1.com
– Through automatic transfer from another CSB account
– Through automatic payroll deductions (with employer sponsored HSAs)
– By mail
– In person
– At an ATM

Please note all contributions made in any form of electronic payment will be credited for the calendar year in which they are made.

• Monthly statements are provided for easy tracking purposes.

How Do I Enroll?
Enrolling in an HSA is easy and can be done in three ways:
• Enroll directly with a CSB Account Relationship Specialist at any of our Banking Centers.
• Enroll through your health insurance provider through your employer.
• Enroll through your health insurance provider for your individual health plan.

Once enrolled in an HSA, you may decide how and when you would like to contribute to your account. Our specialists would be happy to help you find the most efficient approach for you to fund your account.


Minimum balance of $50.00 is required to open the account and to obtain the advertised APY. Please see a CSB Account Relationship Specialist for any miscellaneous fees that could reduce earnings in the account.

TIERS FOR INTEREST:
$50.00 – $999.99
$1,000.00 – $9,999.99
$10,000 & greater

This is general information about Health Savings Accounts and is current as of April 2009. Any legislative or regulatory changes in regards to the HSA are not reflected. It is not intended to provide legal or tax advice. For specific information pertaining to your own personal situation, you are encouraged to consult your tax or legal advisor. You may also learn more about Health Savings Accounts at the IRS website, www.irs.gov