1. What is a Health Savings Account? A health savings account (HSA) is a before taxes payroll deduction that goes into a special checking account that you can set up in combination with a high deductible health plan (HDHP). It is tax free money that you set aside for medical expenses.
2. How Does it Work?
Once the HSA is set up you can arrange through your employer to have a before taxes amount deducted from your paycheck to begin funding your HSA. The amount you have deducted should be calculated to cover most or all of your portion of the deductible medical expense under your HDHP. Medical expenses can be paid using free debit card access to your HSA or checks supplied with the account. The funds in an HSA are yours, including any amount that your employer may contribute. You do not lose your HSA funds if you do not use them. Your HSA can accumulate and earn interest until you retire. You can no longer contribute after you retire, but the money is still available for your medical expenses.
3. Is it Really Tax-Free?
Yes. An HSA is 100% tax free, meaning that you will save about 30% on your self-paid medical expenses, since you are not paying any taxes on the amount being deducted from your paycheck to fund your HSA.
4. What Does it Cost Me to Start an HSA? There are no monthly or annual fees with Powerco HSAs. There is a one-time $5.00 enrollment fee to establish a new HSA. Also, since you are joining the Credit Union you must maintain a minimum $5.00 share balance in a separate account. This is not a fee—it is your money and represents your share of Credit Union ownership. So your total up front expense is a minimum of $10.00. To avoid a $2.00 monthly mailed paper statement fee, we suggest you sign-up for e-statements, which are always free. You will have unlimited free debit card access to your HSA, but if you use checks to pay your medical expenses there will be a $.50 charge to your account each time a check clears. Powerco HSAs are designed to be as low cost as possible with no monthly or annual fees, and by selecting e-statements and using your debit card to pay for medical expenses you can effectively avoid any ongoing fees.
5. Will My HSA Earn Dividends? Yes. Powerco will pay interest on your HSA balance beginning when deposits reach $250.00. The rate will vary depending on current bank rates.
6. What Kinds of Medical Expenses Can I Use My HSA for? IRS Publication 502 outlines the permissible medical expenses when using HSA funds. Generally, most routine medical expenses, such as doctor visits and pharmaceuticals are allowed when using your HSA funds.
7. How Do I Open an HSA at Powerco? You will be asked to fill out a Powerco membership application and debit/check order request. To enable the tax-free benefit you must complete the HSA Custodial Application 2600H-C. Also, to join the credit union you will need to provide a copy of a government-issued photo ID, typically a driver's license. You will find all of this information in the enrollment packet provided at the time of enrollment by your employer, your health insurance representative or Powerco.
8. When Will I Receive My Debit Card and Checks?
Your free check order will arrive in a welcome packet a few days after your HSA application arrives at Powerco. Your new HSA debit card will arrive within about 10 days after your application is processed by Powerco. Please make note of the PIN number you choose for your debit card as you will need it to activate the card. Powerco does not record your PIN number. Also, note that your debit card will arrive in a plain envelope to provide security protection.
9. What is the Authorization Limit on My HSA Debit Card? Your debit card will authorize up to $2000.00 per day to pay for medical expenses.
10. What Happens if I Don't Activate My HSA Debit Card?
Of course, you will not be able to use your debit card to pay for medical expenses if you don't activate your card. The other problem is that if the debit card is not activated it will not automatically renew upon expiration.
11. How Do I Sign Up for E-Statements?
Once you have your new HSA account number (you will receive a welcome packet in the mail) you can logon to your account and choose e-statements from the menu. Then simply follow the prompts to request e-statements instead of paper statements. This is outlined in the welcome packet. E-statements are always free—paper statements are $2.00 per month.
12. What Happens if I Don't Access My HSA?
After six months of no activity on your account you could encounter a dormancy fee. To avoid this fee make at least one deposit or withdrawal each six months.
13. How Will My Taxes be Affected by My HSA? Each year postmarked by January 31st you will receive a form 1099-SA from Powerco which will list all medical transactions authorized from your HSA throughout the preceding year. The 1099-SA must be accounted for in your tax return.Each year, you will receive a form, 5498-SA which sums all contributions made to your account from January 1st through April 15th of the current year. For more information you may wish to consult with a tax advisor.
14. What if I Use My HSA for Non-Medical Expenses?
A tax-free HSA is intended by the IRS to be used only for medical expenses. If it is determined that your HSA funds were used for non-medical expenses (such as gas for your car or dining out at a restaurant) you will be assessed a 20% penalty and will be required to pay back taxes on the funds used.
15. What if I Pay for a Medical Expense Without Using my HSA? Can I be Reimbursed?
Yes. You can reimburse yourself by writing a check from your HSA account. Or, you can call Powerco and ask for a check to be sent to you as a reimbursement from your HSA. The important thing is to keep a receipt from the transaction to show that you were being reimbursed for a qualified medical expense.
16. Who Do I Call if I Have a Health Insurance Question About My HSA?
Contact your health insurance provider or the broker who represents your health insurance provider with any health insurance questions. Contact Powerco if the question directly involves the funds in your HSA checking account. Powerco is a financial institution with no connection to your health insurance provider.
17. What is Shared Branching?
As a member of Powerco Credit Union you may choose to make in-person deposits or withdrawals from your HSA at Powerco's main office at 5665 N. Hamilton Rd. in Columbus or at any of about 40 other credit union branches located in Central Ohio. There is no fee for shared branching—it is a convenience offered by your Credit Union. To take advantage of shared branching when you are at another credit union just tell the credit union representative that you would like to make a shared branching transaction. You will need your Powerco HSA account number and your driver's license.
18. Can I Use Other Credit Union Services Besides the HSA?
Yes. You will become a member of Powerco Credit Union and will have access to all services, including auto loans, home mortgages, money market, VISA credit cards, online home banking, Premier Checking and many other financial services.
19. What Else Can You Tell Me About Powerco Credit Union? Powerco Credit Union is a not-for-profit financial institution serving the residents of and those who work in Franklin County, Ohio. Powerco also serves the employees of American Electric Power and other area companies.
