HSA FAQs

 

 

How does an HSA work?
The amount you contribute is generally not taxable. Funds in your HSA earn interest tax-free. This reduces your taxable income and, potentially, your tax liability. Consult your tax advisor to determine how your HSA affects unique tax circumstances. When you use your HSA to pay for qualified medical expenses, you do not have to pay taxes on the funds you withdraw.

 

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What is a High Deductible Health Plan?
The IRS determines the requirements of a qualifying High Deductible Health Plan http://www.irs.gov/publications/p969/ar02.html. However, if you enrolled through your employer, your employer determined your specific plan design based on those guidelines. Please check your benefit plan materials for your plan design.

 

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When can I contribute to my HSA?
You can begin contributing to your HSA as soon as you receive your account number from Two River Community Bank.

 

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How much can I contribute to the HSA?
Please see http://www.irs.gov/publications/p969/ar02.html.

 

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How do I make contributions to my HSA?
There are a variety of ways to contribute to your HSA:

 

  • Payroll Deductions 
  • Automatic Transfer 
  • Check, Cash, or Money Order (with a completed Contribution Form) 
  • Transfers/Rollovers

 

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How often can I contribute? Is there a limit as to how much I can deposit with each contribution?
You can contribute as often as you wish, as long as your total contribution does not exceed the limits specified by the Internal Revenue Service. HSA contribution limits are excludable (if made by your employer) or tax-deductible (if made by you) up to the statutory maximum amount of single or family coverage as stated by the IRS. Please refer to the IRS Contribution/Deductible Guidelines sheet for the amount you may contribute during the plan year.

 

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What if I have contributed the maximum annual amount and am no longer covered by a High Deductible Health Plan?
If you are no longer covered by a health plan later in the year and have contributed the maximum annual amount, you will need to request an excess contribution refund.

 

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When can I start to use my HSA?
Once your account is open, a deposit has been made to your account and funds are available, you can start using your HSA. You are 100 percent vested as soon as the funds are deposited and you have total control over the funds. Keep in mind that if your employer also contributes to the account, they can determine how often they contribute-yearly, monthly or weekly. Check to see what their contribution schedule will be.

 

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How do I withdraw funds to pay for qualified medical expenses?
You have a variety of options:

 

  • HSA No-Cost Debit Card 
  • Check 
  • Withdrawal Statement

 

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How can I check my balance?
You have access to online monthly statements at TwoRiverBank.com to track account balances and activity. You also will be mailed a monthly account statement.

 

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Is there a monthly maintenance fee?
There is a $5 monthly fee if the account balance falls below $250.

 

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What if I already have an HSA?
If you have an HSA, but not with Two River Community Bank, you can rollover or transfer your HSA to Two River Community Bank by completing your HSA Application and Eligibility and Information Form. Remember, your account must be opened at Two River Community Bank before you can rollover or transfer funds.

 

Rollover: Download a Rollover Certification Form. Close your existing HSA and send the funds to Two River Community Bank to roll into a new HSA.

 

Transfer: Contact the bank that has your existing HSA and ask them to transfer your funds directly to Two River Community Bank.

 

Rollovers and transfers are subject to IRS restrictions. Please contact your tax advisor for information.

 

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What if my total contribution for the year exceeds the IRS limits?
Download from HSA Excess Worksheet and Withdrawal Statement. If you request a refund, there is no penalty as long as the distribution is made before the tax-filing deadline, generally April 15. Earnings on the excess amount are taxable.

 

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How do I report withdrawals that are used for non-eligible expenses?
You must report distributions for ineligible expenses. Consult your tax advisor for specifics.

 

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What information do I need to keep when I withdraw funds?
Save all receipts and records of withdrawals for tax reporting to the IRS. If you use your funds for non-health related expenses, you must report those withdrawals. You are responsible for maintaining all records associated with your HSA – not your employer or Two River Community Bank.

 

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What happens if I withdraw too much and don’t spend it on qualified medical expenses?
Please see http://www.irs.gov/publications/p969/ar02.html.

 

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What happens to my HSA if I leave my employer?
All funds in your HSA, including funds contributed by your employer, are yours to keep. You can: 

  • Keep your HSA at Two River Community Bank 
  • Transfer your funds to another qualifying HSA within 60 days of withdrawing the funds from Two River Community Bank to avoid taxes and penalties

 

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What if I am no longer covered by a High Deductible Health Plan?
If you are no longer covered by a high-deductible health plan, you cannot continue to contribute; however, the money in your HSA is yours to keep at Two River Community Bank or transfer to another qualifying account. If you choose to transfer your HSA to another qualifying account, you must do so within 60 days of withdrawing the funds from Two River Community Bank to avoid taxes and any additional penalties.

 

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What are catch-up contributions?
Generally, when you reach age 55, up to when you are enrolled in Medicare, you can make additional contributions to your HSA to maximize your tax advantages and set aside the money you need. Assuming you are in high-deductible health plan for the full year, the year that you turn 55, you are eligible for the full amount of the catch-up contribution. Please refer to the IRS Contribution/Deductible Guidelines sheet for exact dollar amounts.

 

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Once I am eligible, how can I make catch-up contributions – all at once or over time?
Either method is fine – a one-time contribution or several contributions over time. For specifics, refer to the IRS guidelines or consult a tax advisor.

 

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Will Two River Community Bank provide year-end Tax Forms?
Yes, you will receive two IRS reporting forms. Form 5498-SA is used to report total contributions made to the account during the year and the value of the account at the end of the year. Form 1099-SA reports the total distributions taken from the account during the year.

 

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What happens if there is insufficient funds in my HSA to pay for a medical expense?
Overdrawing your HSA is prohibited by the Internal Revenue Code. This means if you create a negative balance for your HSA, it is no longer treated as an HSA. To prevent you from being disqualified; if, your HSA does not have sufficient funds available for a payment transaction, Two River Community Bank will deny payment and return the item to you. If your account’s balance falls below $0.00, for 30 days, your Health Savings Account ceases to be a Health Savings Account and will be closed by Two River Community Bank. Reference IRC Sec. 4975.

 

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