Health Savings Accounts

The popularity of Health Savings Accounts is on the rise, thanks to a bill passed by Congress to combat rising medical costs. Fremont National Bank & Trust Company offers Health Savings Accounts (or HSAs) to consumers and small business owners which allows them to save money tax-free that can be used for medical costs.

Fremont National is one of few banks in the nation to structure the HSA similar to a checking account that earns interest. This account is hassle-free, with the burden of IRS tax reporting of contributions and distributions falling on the bank. The customer writes checks on this account, or uses a check card to pay for qualified medical expenses. By doing this, all transactions will be recorded for tax purposes.

Fremont National Bank's HSA includes many valuable features.

• Interest earned on balances of $50 and over
• Free Internet Banking and 24-hour TeleBanking Service
• Free first order of checks
• Free Check Card and much more

Other valuable HSA features are:

• HSAs are available to individuals covered by a high deductible health plan (HDHP) regardless of whether the person is self-employed or employed by a small employer, regardless of whether their employer maintains the HDHP.
• An employer may offer HSAs through a cafeteria plan.
• Employer contributions to an HSA offset what an individual can contribute, they do not eliminate an individual's ability to contribute.
• HSA qualifying medical expenses include expenses to purchase certain health insurance after age 65.

Many Benefits for You!

There can be substantial tax benefits to eligible individuals. HSAs provide tax benefits related to paying qualified medical expenses, plus provide benefits similar to many tax-favored retirement plans.

• HSA contributions - by employer or employee - are tax deductible.
• HSA earnings are tax-deferred.
• If used for qualified medical expenses, HSA distributions are never taxed.
• Unused HSA assets may be used for retirement, however, distributions before the HSA account holder reaches age 65 will be subject to a 10% penalty, and if not used for medical purposes, they will be subject to income tax. See your tax advisor.
• Upon death, assets become the property of a named death beneficiary, or the HSA account beneficiary's estate. A spouse may treat the assets as his or her own HSA, while nonspouse death beneficiaries must treat such assets as ordinary, taxable income.

Expenses that Qualify for Tax-free Distributions

• Actual medical expenses, including doctor visits, prescriptions, eye glasses, dental care and transportation to get medical care.
• Long-term care insurance.
• Healthcare coverage when unemployed.
• Certain continuation-of-benefit healthcare coverage and health insurance after age 65.
• Nonqualified uses of HSA assets are subject to taxation, and a 10% penalty unless the HSA account beneficiary is age 65 or older, dies, or is disabled.

Who Can Qualify?

Contributions can be made to your HSA during any month that you:

• are covered under an HDHP on the first day of such month;
• are not also covered by any other health plan that is not an HDHP (with limited exceptions);
• are not entitled to benefits under Medicare (generally not yet age 65);
• are not able to be claimed as a dependent on another person's tax return.

Advantages for Self-Employed

If you are self-employed or a sole proprietor, you are an ideal candidate for an HSA.

• High-deductible health insurance plans generally have modest premium costs, and may be an effective cost-containment mechanism for the employer.
• The employer is protected against potentially catastrophic healthcare expenses.
• The HSA may serve the dual purpose of providing for both medical and retirement expenses.

The total amount you or your employer may contribute on your behalf to an HSA for any taxable year is dependent upon whether you have individual or family coverage under a high deductible health plan.

If you are age 55 before the close of a taxable year, you may also contribute an additional amount known as a "catch-up" contribution.

Reporting Required

Employer contributions to an HSA must be reported on the employee's W-2.

A Personal Banker is available to open accounts at the following locations and times:

152 East 6th Street - Fremont, Nebraska 68025
9:00 a.m.-4:00 p.m. Mon.-Fri.; 9:00 a.m.-noon Sat.

801 East 23rd Street
9:00 a.m.-6:00 p.m. Mon.-Fri.;
9:00 a.m.-1:00 p.m. Sat.

402-721-1050