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Health Savings Accounts

Health Savings Accounts (HSA's) were created by Congress as a tax-sheltered account for individuals with a High Deductible Health Plan, with a minimum deductible of $1,000 annually ($2,000 for families). Contributions are fully deductible, the earnings grow tax deferred, and distributions of qualified medical expenses are tax free.

Consult with your tax or legal professional for guidance. For more information or to open your Health Savings Account, stop by the main office of The Bank of LaFayette!

Health Savings Accounts Frequently Asked Questions (FAQ's)

You are eligible to make or receive an HSA regular contribution if, with respect to any month, you:
  • Are covered under a high-deductible health plan (HDHP);
  • Are not also covered by any other health plan that is not an HDHP (with certain exceptions for plans providing preventive care and limited types of permitted insurance and permitted coverage);
  • Are not enrolled Medicare; and
    Cannot be claimed as a dependent on another person's tax return.
An HDHP is a plan with an annual deductible of at least $1,000 for single (self-only) coverage or $2,000 for family coverage. These amounts are subject to cost-of-living adjustments (COLA's).
Yes. For HSA purposes, the HDHP must limit our-of-pocket expenses. For 2004, the maximum out-of-pocket expenses, which include money applied to your deductible and your coinsurance for covered charges, must be no more than $5,000 for single coverage and no more than $10,000 for family coverage. These amounts are subject to COLA's.
An HSA is established by you in much the same way that you establish an IRA - with a qualified trustee or custodian.
If you meet the eligibility requirements for an HSA, you, your employer, your family members, and any other person (including non-individuals) may contribute to your HSA. This is true whether you are self-employed or unemployed.
The maximum annual contribution amount is generally the lesser of 100 percent of the annual deductible under the HDHP or a specified amount (subject to COLA's). For 2004, the specified amount is $3,600 for single coverage and $5,150 for family coverage.

Additionally, a "catch-up" contribution is available for eligible individuals who are age 55 or older by the end of their taxable year and have not enrolled in Medicare. The chart that follows shows these additional amounts.

Tax Year Catch-Up Amount
2009 and after
Contributions to an HSA are fully deductible, the earnings grow tax deferred, and distributions for qualified medical expenses are tax free. Consult with your tax or legal professional for guidance.
Contributions made by you, your family members, and any other person on your behalf, which do not exceed the maximum annual contribution amount, are deductible by you when determining your adjusted gross income for your federal income tax return. You cannot deduct employer contributions, and these contributions will not count as wages for federal income tax purposes.
Regular and catch-up HSA contributions can be made at any time for a taxable year up to and including your federal income tax return due date, excluding extensions, for that taxable year. The due date for most taxpayers is April 15.
Distributions from your HSA used exclusively to pay for qualified medical expenses of you, your spouse, or your dependents are excludable from your gross income. AN other distributions are includable in your gross income and are subject to an additional 10 percent tax on the amount includible, except in the case of distributions made after your death, your disability, or your attainment of age 65. HSA distributions that are not rolled over will be taxes as income in the year distributed, unless they are used for qualified medical expenses. HSA custodians/trustees are not required to determine whether HSA distributions are used for qualified medical expenses.

The qualified medical expenses must be incurred only after the HSA has been established. However, for calendar year 2004, an HSA established by you on or before April 15, 2005, may pay or reimburse on a tax-free basis an otherwise qualified medical expense if that expense was incurred on or after the later of: (1) January 1, 2004, or (2) the first day of the moth that you became eligible for an HSA.

Spouse Beneficiary
If your spouse is the beneficiary of your HSA, the HSA becomes his/her HSA.

Non Spouse Beneficiary
If your beneficiary is not your spouse, the HSA ceases to be an HSA as of the date of your death. If your beneficiary is your estate, the fair market value of the HSA as of the date of your death is taxable on your final return. For other beneficiaries, the fair market value of your HSA is taxable to that person in the tax year that includes such date.
NOTE: This information is effective for tax-year 2004 and thereafter. This information is intended to provide general information concerning federal tax laws governing HSA's. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. The IRS's web site,, may also provide helpful information.
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Service to the Community

Civic groups or businesses as well as individuals can use the center for baby and wedding showers, personal meetings, parties, adult birthdays, family outings, etc. can access community center facilities. Just contact us to reserve a room.

Community Rooms