Health Savings Account (HSA)

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A health savings account (HSA) is a tax-exempt trust or custodial account set up with Denison State Bank that allows account holders to pay or be reimbursed for certain medical expenses. This account must be used in conjunction with a high deductible health plan (HDHP).

HSA Basics:

  • Account: Checking account earns tiered money market savings rate, based on balance. Interest compounded monthly.
  • Minimum Deposit to Open: $100.00
  • One-time Origination Fee: $25.00
  • Contributions: Minimum of $25 if monthly recurring contributions, or minimum of $100 if periodic (non recurring) contribution. Contributions can be received at any DSB location. Online funds transfers to the HSA from other DSB accounts are not allowed. Contributions from an IRA are allowed under certain conditions. In tax year 2021, depositors under age 55 can contribute up to $3,600 if you have single HDHP, and up to $7,200 if you have family HDHP, even if the deductibles are less. Account holders age 55 and over can contribute an additional $1,000 per year. Contribution deadline is the contributor's tax filing deadline (example: contributions for calendar year 2020 can be made until April 15, 2021).
  • Distributions: The only authorized way distributions (debits) can be done is by writing paper checks, using linked DSB debit card, or telephoning any DSB location to transfer funds to another DSB account. Electronic funds transfers/distributions, including digital banking transfers in and out, are not allowed.
  • Ownership Status: Must be opened as Single Ownership.
  • Statements: Delivered monthly, either in mail or online. 
  • How To Open: Can be opened weekdays through Rex Frazier or Deb Knouft at the bank's main office in Holton. 


  • Must have a "high deductible health plan" (HDHP) with minimum deductible for single/family coverage AND maximum out-of-pocket for single/family."  For tax year 2021, an HDHP is defined as: Minimum deductible of $1,400 for single and $2,800 for family coverage, AND maximum out-of-pocket of $7,000 for single or $14,000 for family coverage. Annual adjustments are made based on inflation.
  • Cannot have other health coverage except as permitted. An individual with a prescription drug plan can qualify as an eligible participant if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met; if the prescription benefits can be received before the deductible is met, the individual will not qualify. An employee covered by an HDHP and a flexible spending account (FSA) or health reimbursement account (HRA) generally cannot make contributions to an HSA except as allowed.
  • Cannot be enrolled in Medicare.
  • Must be age 18 years or older. Cannot be claimed as a dependent on someone else's tax return.


  • Tax deduction can be claimed for contributions made. *
  • Interest and other earnings on the assets are tax free. *
  • Distributions may be tax free if being used to pay for Qualifying Medical Expense. *
  • Contributions made by an employer may be excluded from the employee's gross pay.
  • Contributions remain in the account from year to year (no "use it or lose it" policy). Easily portable and stays with the account holder.


  • Tax-free, penalty-free distributions are permitted when paying or reimbursing for qualifying medical expenses (QME) incurred after establishing the HSA.*  See additional provisions from CARES Act due to coronavirus. 
  • Taxable distributions occur if the withdrawal is done for reasons other than for QME and will be subject to a 20% penalty tax on customer's tax filing.*
  • Customer does not have to take a distribution each year, allowing for contributions to accumulate.
  • Even if customer becomes no longer qualified to make contributions, qualified tax-free distributions can still be taken. *
  • Customer cannot treat insurance premium payments as QME, except as allowed.

     *Tax laws and regulations change frequently, and their application can vary widely based on the specific facts and circumstances involved. If you have questions regarding accounting issues specifically related to your personal or business circumstances, you should consult with your own professional tax advisor, accountant, attorney, industry expert or professional association.