Q:

What are the benefits of opening an HSA account through a bank?

A:

Quick Answer

One of the benefits of opening Health Savings Accounts through banks is that although employers can contribute to the accounts, the employees retain ownership even if they change jobs, reports Mayo Clinic. The funds remain in the accounts until employees need them for health care expenses. Some banks place the funds in investments so that they grow over time, points out Kiplinger.

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Full Answer

Employees can claim tax deductions for contributions to Health Savings Accounts, and employer contributions to the accounts are not counted as part of employees' gross income, according to the Internal Revenue Service. As long as employees use the funds for qualified medical expenses, distributions are tax free. Although there is a limit to how much any person can contribute annually to a Health Savings Account, the IRS allows people aged 55 or older to make additional contributions.

To qualify for a Health Savings Account, a person must have a high-deductible health plan and no other medical coverage except for vision, dental, accidents, long-term care and disability, explains the IRS. The applicant must also be less than 65 years old, as Medicare enrollees are not eligible for Health Savings Accounts, and the applicant must not be counted as a dependent on someone else's tax return.

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