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HSA: An Innovative Approach to Health Coverage

A Health Savings Account, or HSA, is a pre-tax account that can provide health coverage as well as an investment to those who qualify. This innovative approach to health coverage has advantages that can keep both your personal and financial life healthy.

What is an HSA and how does it work?

Our Health Savings Account, Key HSA, allows you to contribute pre-tax funds to a federally-insured checking account. Those funds will be held in an interest-bearing account that can be used to pay medical expenses that aren’t covered by your health insurance policy or as a nest egg that will grow over time. Medical expenses it can cover include your insurance deductible, prescriptions, over-the-counter medications, and even emergency room visits. The key qualifying factor is that your insurance coverage must be a high-deductible policy and that you have retained all necessary receipts.

Who qualifies for an HSA?

To be eligible for this innovative approach to health coverage, you must be enrolled in a high deductible health plan and that plan must be designated by the IRS as a Consumer-Driven Health Plan. An HSA-qualified health plan has a minimum deductible and a maximum out-of-pocket expense. You also can’t be covered by any other health insurance plans, be claimed as a dependent by someone else, or be enrolled in Medicare to contribute. If you’re unsure about your plans, consult your Human Resources Department or insurance provider.

What are the benefits of an HSA?

  • Save on taxes—Your HSA contributions go into your account before taxes. The money you save to your HSA lowers your taxable income so you may pay less in income taxes. Plus, if you choose to invest funds from your HSA account, the earnings are tax-free as well.
  • Save on your medical expenses—HSA funds can pay for coinsurance, copays, and deductibles—all tax-free. Plus, you can use HSA funds to pay for costs that your plan might not cover, like dental and vision.
  • You’re in control—You decide when and how to spend your money. HSA accounts earn tax-free interest and can be rolled over to the next year.
  • Save for retirement—At age 65, you can use your HSA funds for any purpose without a penalty. However, non-medical uses, such as vacations, will be considered taxable income.
  • Multiple signers—The account owner can add additional signers to an HSA account with access to those funds.
  • Additional features— Our Key HSA has no minimum monthly balance; no monthly service charge; free debit card; view-only Online Banking privileges; and is eligible for payroll deduction.

What types of expenses are eligible?

In addition to doctor’s visits, prescriptions, and coinsurance, HSAs cover a wide variety of expenses, including first aid and health monitoring supplies, feminine hygiene products, drug addiction treatment, chiropractor visits, vision supplies, fertility and maternity services, and qualified dependents’ health expenses, even if they’re not on your health plan.

Is there a limit to an HSA?

There are limits to an HSA as determined by the IRS. In 2023, individuals can contribute up to $3,850, and families can contribute $7,750. If you’re 55 or older, you can make an additional $1,000 contribution to your HSA annually.

Overall, an HSA is an innovative approach to health coverage that can help you plan, save and pay for your personal well-being. If you have an HSA or are considering opening an account, our professionals at First Keystone Community Bank can assist you. For more information, call 570-752-3671, or visit

Written by Tina Roth

Tina is the IRA/HSA Specialist Officer for First Keystone Community Bank.

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Posted On:

November 7, 2023

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