Health Savings Accounts

Just what the doctor ordered - a better way to pay medical expenses

Set aside money for everything from emergency care to eye exams

Good health care is vital. For many people, a Health Savings Account is a smart way to save for the costs when they have a high-deductible health plan. Accounts can pay for prescription drugs, as well as a wide range of medical, dental and vision care.

It's not insurance. But it can be just as valuable.

Health Savings Accounts (HSAs) are designed for people with high-deductible health plans from an employer. If you (or a covered family member) are ill or injured, an HSA can help you afford the best treatment possible.

  • Contribute up to $3,600 a year for individuals and $7,200 for families in 2021 (Numbers will rise to $3,650 and $7,300 in 2022)
  • Earn interest on your deposits without paying taxes on gains1
  • Withdraw money tax-free, as long as withdrawals are used for qualifying medical expenses1
  • Pay for qualified medical costs with a dedicated debit card
  • Track your savings through The Bank of Missouri's online banking, and use online tools to make automatic transfers to your HSA
  • If you don't use all your contributions one year, they roll over to the following year
  • If you change jobs, your HSA stays with you

Qualified Medical Expenses

In addition to doctor bills and hospital costs, HSAs can cover:

  • Ambulance service
  • Dental treatment
  • Eyeglasses
  • Hearing aids
  • Lab fees
  • Nursing services
  • Physical therapy
  • Prescriptions drugs
  • Psychiatric care
  • Surgeries
  • Vaccinations
  • Weight-loss programs

Over-the-counter medications and health insurance premiums generally do not qualify. For a complete list of qualified medical expenses, please see IRS Publication 502.

More About Health Savings Accounts

You must be enrolled in an HSA-qualified "high deductible health plan" (HDHP) that doesn’t cover all medical expenses. Your health plan must meet IRS guidelines for the annual deductible and out-of-pocket maximum.

2021 Minimum annual deductible
Individual coverage: $1,400
Family Coverage: $2,800

2021 Annual out-of-pocket maximum
Individual Coverage: $7,000
Family coverage: $14,000

2022 Minimum annual deductible
Individual coverage: $1,400
Family Coverage: $2,800

2022 Annual out-of-pocket maximum
Individual Coverage: $7,050
Family coverage: $14,100

You cannot:

  • Be covered by any other health plans, including Medicare, unless additional plans are HDHP’s.
  • Be claimed as a dependent on someone else’s tax return.
  • Receive Veterans Administration benefits within the past three months for a non-service connected disability.

Individual contributions you make to your HSA that do not exceed the maximum contribution limit are tax deductible on your federal income tax return. Because you deduct these contributions "above-the-line" when computing your adjusted gross income, you can deduct HSA contributions even if you don't itemize. You can also deduct contributions made by a family member on your behalf.

If your employer makes contributions to your HSA, these are excludable from your gross income. Any contributions made through a cafeteria plan are treated as employer contributions. However, you cannot deduct employer contributions to your HSA.

Tip: Employer contributions will be reported in Box 12 of your Form W-2.
Tip: Employer contributions are not taxable to the employer and are not subject to FICA or FUTA taxes.

At the end of the year:
Funds remaining in your account at the end of the year are not forfeited and can continue to accumulate tax free year after year until withdrawn.

If you change jobs:
An HSA is portable. Because the account is yours, you can keep it and continue to make contributions even if you change employers or leave the workforce.

If you divorce:
If all or part of your interest is transferred to your spouse as part of a divorce settlement, it will not be considered a taxable transfer, and the transferred interest will continue to be treated as an HSA.

If you retire:
Although you can no longer open or make contributions to an HSA once you reach age 65 and are enrolled in Medicare, you can take tax-free distributions from your account to pay for medical expenses. You can withdraw funds from your account for nonmedical purposes without owing a penalty (although the amount you withdraw will be subject to income tax).

If you die:
Funds remaining in your HSA upon your death become the property of your designated beneficiary. If the beneficiary is your spouse, he or she becomes the account holder and the account remains an HSA. If the beneficiary is not your spouse, the account ceases to be an HSA as of the day of your death, and the fair market value of the funds are includable in your beneficiary's gross income.

Start Banking Well

1Please consult with a tax or legal professional for guidance on tax implications related to savings products.