At BFG Federal Credit Union, we offer convenient and beneficial HSA or Health Savings Account plans. Learn more about how they work and the benefits of Health Savings Accounts below.
What is a Health Savings Account (HSA)?
With an HSA, consumers set aside money each month into their account. The money in this account can only be used to pay for qualified medical expenses, including doctor visits, the costs of prescriptions, long-term care, and even healthcare coverage while unemployed.
This type of plan may be offered by an employer, or it may be sought out on an individual basis. Additionally, there's a limit to annual HSA contributions.
Weighing the Advantages and Disadvantages
So, what are the actual advantages and disadvantages of a Health Savings Account? First and foremost, one of the biggest advantages of an HSA is that the money is tax-deductible. And when paying the full contribution limit, that can make a huge annual difference on tax day. Additionally, that money remains in possession of the owner of the account and can build from year to year if unused funds remain.
On the downside, health savings accounts are going to have higher deductibles. That means that a greater amount of money is coming out of pocket to pay for medical expenses, as opposed to paying higher premiums each month.
For someone who is generally healthy, this can help him or her save money from month to month. On the downside, if something big does arise, it may be difficult to pay for those bills if funding to the HSA just started or limited funds are available due to previous medical expenses. So it's a tradeoff, and each individual will have to weigh their own personal circumstances based on budget, health, and so forth to determine what makes the most sense.
Another factor to consider is that making deposits to an HSA is entirely under the control of the account holder, so without proper discipline, it may be easy to put the HSA deposit last on their priorities when money is tight. Setting up a payroll deduction or direct deposit from payroll is a recommended solution to help make regular deposits. Individuals may also be hesitant to get the medical assistance they need because they will use up all their HSA funds. Alternative lending solutions are helpful and available in solving this dilemma.
An HSA can be a great tool for many people. Such an account offers tax benefits, puts control into the individual's own hands, offers a way to continue building up saved money for future expenses if unspent, and can be used for retirement funds after age 65. On the other side of the coin, expenses that pop up unexpectedly can be quite difficult to stay on top of. It comes down to deciding what will work best for each individual.
What are qualified medical expenses?
In order for HSA assets to retain their tax-free status, they may only be withdrawn and used for certain expenses, including:
Actual medical expenses, including doctor visits, prescriptions, transportation to get medical care, and dental care
Long-term care insurance
Healthcare coverage when unemployed
Certain continuation-of-benefit healthcare coverage
Certain health insurance after age 65
Nonqualified uses of HSA or Health Savings Account assets are subject to taxation and a 10% penalty unless the HSA account beneficiary is aged 65 or older, dies, or is disabled.
Visit the IRS website at www.irs.gov for more information about qualified medical expenses.
What are the HSA contribution rules?
The total amount you may contribute to a Health Savings Account for any taxable year is dependent upon whether you have individual or family coverage under a high deductible health plan (HDHP), as shown in the table below.
2026 HSA Contribution Limits*
| Plan Coverage | Self Only | Family |
|---|---|---|
| Annual Contribution Limit | $4,400 | $8,750 |
*HDHP and contribution limitations for health savings accounts are revised each year to reflect cost-of-living increases.
In addition to the standard HSA contribution limits shown in the table, if you have attained age 55 before the close of a taxable year, you may also contribute an additional amount known as a "catch-up" contribution. The catch-up contribution limit is $1,000.00 for 2026.
Come in to one of our two locations, Akron or Hudson, or call us today at (800) 306-4400 ext. 4126 to get started with a Health Savings Account.