Health Savings Accounts

What Is a Health Savings Account (HSA)?

An HSA is a tax-advantaged savings account designed for individuals covered by a High Deductible Health Plan.

It offers what’s known as a triple tax advantage:

1. Contributions are tax-deductible
2. Earnings grow tax-free
3. Withdrawals for qualified medical expenses are tax-free

No other savings vehicle offers all three benefits.

Are you eligible?

The answer is YES if you meet the following requirements:

• You are covered by a High Deductible Health Plan
• You aren’t covered by more than one health plan
• You aren’t enrolled in Medicare
• You aren’t claimed as a dependent on another person’s taxes

No “Use It or Lose It”

Your contributions, interest, and withdrawals are never taxed if used for qualified medical expenses.

There is no “use it or lose it” deadline!

Unlike Flexible Spending Accounts (FSAs):

• Funds roll over year after year
• There is no annual forfeiture
• There is no required minimum distribution in retirement

Your balance continues to grow until you need it.

Qualified Medical Expenses:

• Prescriptions
• Long-term care services
• Medicare premiums
• Doctor visits
• Dental care
• Vision care
• Hearing aids
• Hospital bills
• Physical therapy
• Many more – contact us for a complete list

Why Use an HSA for Retirement Planning?

Healthcare costs in retirement can be significant. It is estimated that a 65-year-old couple retiring today may spend hundreds of thousands of dollars on medical care over their lifetime.

An HSA can act as a powerful supplemental retirement vehicle because:

• Contributions reduce your current taxable income
• Growth compounds tax-free
• Withdrawals for qualified medical expenses are never taxed

If you can afford to pay current medical expenses out of pocket, allowing your HSA to grow long-term may significantly strengthen your retirement strategy.

At age 55, you may also make an additional $1,000 catch-up contribution each year.

HSA Account Features at First Western Bank

HSA Checking Account

Your contributions are deposited into an interest-bearing HSA checking account.

• Debit card included for medical purchases
• Interest compounded monthly
• Easy access to funds
• No annual forfeiture

Contact your local First Western Bank branch for current rates.

HSA Certificate of Deposit (CD)

As your balance grows, you may transfer funds into a 1-year Certificate of Deposit to earn a higher interest rate.

This option helps maximize growth while maintaining HSA tax advantages.

HSA Investment & Agency Accounts

Through our Trust Department, eligible HSA holders may invest a portion of their funds in:

• Mutual funds
• ETFs
• Individual stocks
• Bonds

This allows for long-term growth beyond traditional money market yields.

Investments are not FDIC insured and may lose value.

Frequently Asked Questions About HSAs

What is the HSA contribution limit?

Contribution limits are set annually by the IRS and vary by individual vs. family coverage. Contact us for current year limits.

Can I use my HSA after age 65?

Yes. After age 65, funds can still be used tax-free for qualified medical expenses. Non-medical withdrawals are taxed like traditional IRA distributions.

What happens if I change jobs?

Your HSA stays with you. It is portable and not tied to your employer.

Can I invest my HSA funds?

Yes. Eligible account holders may invest through our Trust Department options.