Health Savings Accounts

What is a Health Savings Account?

A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States where funds contributed to the account are not subject to federal income tax at the time of deposit. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses may incur penalties. We recommend contacting a qualified tax or legal counsel before establishing an HSA.

What are the advantages of having a Health Savings Account?

Tax savings

• Health Savings Accounts were designed to help individuals save for qualified current and future medical expenses on a tax-free basis. In addition, funds you withdraw from your HSA to pay for qualified medical expenses are tax-free. After-tax contributions you make (or that individuals other than your employer make on your behalf) to your HSA account each year are deductible on your income tax return in the same manner as an Individual Retirement Account (IRA) account regardless of whether you spend it or save it (to the extent that you did not contribute more than permitted for the year).

Balance rolls over

• The unused balance in your HSA carries over from one year to the next so you never lose any funds in your account. You can also use your HSA to pay for qualified medical expenses from a previous year, as long as they were incurred after the HSA was established (or as otherwise permitted by applicable law).

Tax-free growth

• Funds in the account can grow tax-free.

Portability

• Funds contributed to an HSA belong to you and are completely portable. A portable HSA provides a long-term consistent account that moves with you through all of life's changes, including a new job, new health plans, or retirement.

How do I open a new Health Savings Account?

Visit one of our convenient branch locations.

There are certain conditions that must be met prior to opening a Tennessee Bank & Trust Health Savings Account. You cannot open a Health Savings Account if you:

• Can be claimed as a dependent on anyone else's tax return.
  
• Are currently receiving Medicare benefits.
  
• Are enrolled in any non-qualifying health coverage that does not satisfy the statutory minimum deductible requirements of Internal Revenue Code Section 223 (unless that coverage is limited to certain permitted types of coverage or insurance). If you have a Flexible Spending Account or a Health Reimbursement Arrangement with your employer, or if you are covered under your spouse's Flexible Spending Account or Health Reimbursement Arrangement, you may not be eligible to open a Health Savings Account. (Your employer's benefits administrator should be able to help answer whether your Flexible Spending Account or Health Reimbursement Arrangement will allow you to open a Health Savings Account.)

These conditions are subject to change. For more information, go to http://www.treas.gov/offices/public-affairs/hsa/.

Tennessee Bank & Trust offers Health Savings Accounts ("HSA") as custodian only. The HSA is intended to qualify as a Health Savings Account as set forth in Internal Revenue Code Section 223. However, you are solely responsible for ensuring that you satisfy the HSA eligibility requirements set forth in Section 223. If you establish an HSA and you are not otherwise eligible, you will be subject to adverse tax consequences. We recommend that you contact qualified tax or legal counsel before establishing an HSA.