Increasing Your Health and Wealth

By Paula W. Smith, PHR, SHRM-CP, FCS, CFC

Health Savings Accounts Feature BB&T Perspectives

There are many people who are unfamiliar with Health Savings Accounts (HSAs), or are unaware of their HSA’s benefits. For example, it’s not always known that an HSA can help a person save additional tax-deferred income for retirement, in addition to funding medical expenses in the present.

Qualifying For an HSA

To contribute to an HSA, individuals must be enrolled in a high deductible health plan (HDHP). For 2017, the deductible must be at least $1,300 for individual coverage or $2,600 for family coverage. Premiums are typically lower for a HDHP versus a traditional HMO or PPO plan. However, with an HDHP, individuals must pay the insurer’s negotiated discount rate for services, including physician visits, prescriptions, hospital stays and surgical treatments.

In this “health and wealth” strategy, deposits can be made to an HSA by the insured, their employer or any other person and all are federal income tax deductible. In addition, catch-up contributions ($1,000 for 2015-2016 and 2016-2017) may be made by individuals who are age 55 or older to 64. Most people can contribute on a pretax basis. However, business owners, owners’ family members, anyone with more than a 2-percent share of the business and self-employed persons make post-tax contributions to the plan and then take the tax deduction from their annual federal tax filing. In addition, multiple investment options are often available – and all HSA investment earnings are tax deferred.

Unlike a Flexible Spending Account (FSA), where participants may only roll over up to $500 each year, all money contributed to an HSA – as well as any earnings on that money – is yours to keep, even if you change employers or retire.

Benefits of an HSA

  • Contributions are tax free (provided you qualify for tax-free contributions)
  • Distributions for qualified medical expenses are tax free
  • Funds can be withdrawn for any reason, but withdrawals that are not for qualified medical expenses are subject to income tax and a 20-percent penalty (penalty is waived for persons who have reached age 65 or are disabled)
  • Savings roll over from year to year
  • Accumulated interest and dividends are tax free or tax deferred
  • HSA money can be used to pay for Medicare premiums and long-term care expenses
  • Your HSA is portable; it goes where you go

Speak to your BB&T Wealth advisor or visit BBT.com and click on “Health Savings Accounts” in the personal menu for additional information.

Increasing Your Health and Wealth

By Paula W. Smith, PHR, SHRM-CP, FCS, CFC

Health Savings Accounts Feature BB&T Perspectives

There are many people who are unfamiliar with Health Savings Accounts (HSAs), or are unaware of their HSA’s benefits. For example, it’s not always known that an HSA can help a person save additional tax-deferred income for retirement, in addition to funding medical expenses in the present.

Qualifying For an HSA

To contribute to an HSA, individuals must be enrolled in a high deductible health plan (HDHP). For 2017, the deductible must be at least $1,300 for individual coverage or $2,600 for family coverage. Premiums are typically lower for a HDHP versus a traditional HMO or PPO plan. However, with an HDHP, individuals must pay the insurer’s negotiated discount rate for services, including physician visits, prescriptions, hospital stays and surgical treatments.

In this “health and wealth” strategy, deposits can be made to an HSA by the insured, their employer or any other person and all are federal income tax deductible. In addition, catch-up contributions ($1,000 for 2015-2016 and 2016-2017) may be made by individuals who are age 55 or older to 64. Most people can contribute on a pretax basis. However, business owners, owners’ family members, anyone with more than a 2-percent share of the business and self-employed persons make post-tax contributions to the plan and then take the tax deduction from their annual federal tax filing. In addition, multiple investment options are often available – and all HSA investment earnings are tax deferred.

Unlike a Flexible Spending Account (FSA), where participants may only roll over up to $500 each year, all money contributed to an HSA – as well as any earnings on that money – is yours to keep, even if you change employers or retire.

Qualifying For an HSA

To contribute to an HSA, individuals must be enrolled in a high deductible health plan (HDHP). For 2017, the deductible must be at least $1,300 for individual coverage or $2,600 for family coverage. Premiums are typically lower for a HDHP versus a traditional HMO or PPO plan. However, with an HDHP, individuals must pay the insurer’s negotiated discount rate for services, including physician visits, prescriptions, hospital stays and surgical treatments.

In this “health and wealth” strategy, deposits can be made to an HSA by the insured, their employer or any other person and all are federal income tax deductible. In addition, catch-up contributions ($1,000 for 2015-2016 and 2016-2017) may be made by individuals who are age 55 or older to 64. Most people can contribute on a pretax basis. However, business owners, owners’ family members, anyone with more than a 2-percent share of the business and self-employed persons make post-tax contributions to the plan and then take the tax deduction from their annual federal tax filing. In addition, multiple investment options are often available – and all HSA investment earnings are tax deferred.

Unlike a Flexible Spending Account (FSA), where participants may only roll over up to $500 each year, all money contributed to an HSA – as well as any earnings on that money – is yours to keep, even if you change employers or retire.

Benefits of an HSA
  • Contributions are tax free (provided you qualify for tax-free contributions)
  • Distributions for qualified medical expenses are tax free
  • Funds can be withdrawn for any reason, but withdrawals that are not for qualified medical expenses are subject to income tax and a 20-percent penalty (penalty is waived for persons who have reached age 65 or are disabled)
  • Savings roll over from year to year
  • Accumulated interest and dividends are tax free or tax deferred
  • HSA money can be used to pay for Medicare premiums and long-term care expenses
  • Your HSA is portable; it goes where you go

Speak to your BB&T Wealth advisor or visit BBT.com and click on “Health Savings Accounts” in the personal menu for additional information.

About the Author

Paula W. Smith, PHR, SHRM-CP, FCS, CFC

Paula W. Smith, PHR, SHRM-CP, FCS, CFC

Vice President, Benefit Consultant

Paula has more than 20 years of experience in human resource administration, flexible benefit plans and ERISA health care compliance and has achieved the a variety of human resource and compensation professional designations. Paula is a graduate of Appalachian State University with a bachelor’s degree in business administration.