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Health Savings Account (HSA)

A health savings account (HSA) is designed to increase your earnings while decreasing your medical expenses and income taxes. In other words, they're the rare win-win-win situation for everyone.

A First Federal HSA is an ideal way to pay for current medical costs and save for future expenses. The funds are always yours and roll over year-to-year, whether opened as individual or through an employer. So the only logical thing to do is open one today!

Summary

Competitive interest grows tax free
Tiered rates; higher balances earn greater interest
Withdrawals remain tax free when used for qualified medical expenses*
Direct deposit contributions are made before income is taxed*
Post-tax contributions are tax deductible*
No "use it or lose it" policy
Funds are always yours, not tied to an employer
No minimum balance or monthly maintenance fee
Easy withdrawal access by Visa® debit card, check, online banking, phone banking, and in person

Check out our current rates.

*Consult a tax advisor. Withdrawals for non-qualified medical expenses are subject to income tax and a 20% penalty. The 20% penalty is waived for persons 65 and over or who have become disabled.

HSA Details

Eligibility

Eligibility to open your tax-exempt HSA is based on meeting these basic requirements:

Must be covered under a qualified high deductible health plan
Must not have coverage by another type of health plan
Cannot be claimed as a dependent on another person's tax return
Cannot be enrolled in Medicare

Qualified Expenses

Your HSA funds can be used on a 100% tax-free basis for the following:

Qualified medical expenses
Travel expenses to receive qualified medical care
COBRA or other medical insurance during times of unemployment
Long-term care insurance premiums

A great deal of healthcare costs, including many alternative medicines, are considered "qualified medical expenses" under an HSA. We have provided an easy-to-read list of eligible expenses that covers most queries.

For more detailed information, refer to IRS Publication 502.

Contribution Limits

Contribution limits are set by the IRS. Current 2011 contribution limits are:

$3,050 for a single person
$6,150 for a family
A person age 55 or older may make an additional $1,000 in "catch-up" contributions

What’s an HDHP?

A high deductible health plan (HDHP) is an alternative health insurance plan to a traditional HMO or PPO plan. As the name implies, an HDHP has a higher deductible than regular health insurance plans. This may mean more out-of-pocket expenses up front. But once the deductible is met, an HDHP typically pays for 100% of covered medical costs. So in the long run, an HDHP usually means less—often significantly less—out-of-pocket expenses.

But what about that initial high deductible?

That's where combining your HDHP health insurance to a health savings account (HSA) comes in. By accumulating funds in your HSA, you will have the cash needed to cover those costs. What's even better is your HSA is tax exempt.

Rollovers & Transfers

If you'd like, you may jump start your HSA with rollovers or transfers.

May be funded by IRA rollover once during life of HSA. This rollover is subject to annual contribution limits.
Rollovers from other HSAs or other medical savings accounts are permitted once per 12-month period. These rollovers are not subject to annual contribution limits.