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Health Savings Account

Designed for customers who have a qualifying High Deductible Health Plan with an annual deductible of at least $1,100 for individual coverage or $2,200 for family coverage.

• No minimum to open
• No minimum balance
• Unlimited check writing
• Interest paid on entire account balance - refer to rates
• No annual fee debit card^
• Free Hills Bank Online^SM
• Unlimited free Hills Bank ATM transactions^^
• $1* per non-Hills Bank ATM withdrawal^^
• $3* monthly fee (waived for Employee Advantage Account)

*Subject to Iowa state sales tax
**Subject to Iowa state sales tax
^Subject to credit approval
^^A fee may be imposed by a non-Hills Bank ATM owner

Frequently Asked Questions about Health Savings Accounts

These are meant to be general guidelines. For complete information about a Health Savings Account, visit www.irs.gov or speak to your tax consultant.

Q: What is a Health Savings Account (HSA)?
A: This is an account that permits individuals to save for, and pay health care expenses on a tax-free basis. It is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must have an eligible health plan to qualify for an HSA.

Q: Who is eligible to have an HSA?
A: You must have a qualifying High Deductible Health Plan (HDHP) with an annual deductible of at least $1,100 for individual coverage or $2,200 for family coverage. These amounts are subject to cost-of-living adjustments. Please verify with your health insurance provider to be sure your plan qualifies. In addition, you cannot have any other healthcare coverage (visit www.irs.gov for more details), be enrolled in Medicare, or be claimed as a dependent on someone else's tax return.

Q: Is an HSA right for me?
A: We suggest you consult with your tax advisor prior to establishing an account.

Q: How is a Health Savings Account (HSA) established?
A: No permission or authorization from the IRS is necessary to establish an HSA. When you set up an HSA, you will need to work with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement accounts (IRAs). The HSA can be established through a trustee that is different from your health care provider.

Q: Who can contribute to my HSA?
A: Once you have met the requirements, you, your employer, and your family members may contribute to your HSA, regardless of your employment status.

Q: How much can I contribute to my HSA?
A: Generally, you can contribute the lesser of 100% of the annual deductible under your HDHP or a specified amount (subject to cost of living increases). In addition, a "catch-up" contribution is available for eligible individuals who have attained age 55 by the end of their taxable year but not enrolled in Medicare.

Q: What are the federal tax benefits of HSA?
A: 100% of your contribution(s) is deductible. The earnings grow tax-deferred and all qualified distributions are tax-free. Be sure to consult with your tax or legal professional for guidance.

Q: How do I claim the federal tax deduction for my HSA contribution?
A: Any contributions made by you and your family members on your behalf are tax deductible as long as they do not exceed the maximum annual contribution amount. Employer contributions are not deductible. However, any employer contributions do not count as wages for federal income tax purposes.

Q: When is the contribution deadline for funding an HSA?
A: All regular and catch-up HSA contributions for the current year can be made at any time during that year up to and including April 15 of the following year, or the date you file your tax return.

Q: How are HSA distributions taxed?
A: Qualified distributions from your HSA are excluded from gross income. Any other distributions should be included in your gross income and are subject to an additional 10% tax on the amount included, except upon your death or disability or when you reach the age of 65. Any HSA distributions that are not rolled over will be taxed as income in the year they are distributed unless used for qualified medical expenses. HSA custodians/trustees are not required to determine whether HSA distributions are qualified.

Q: What happens to my HSA in the event of my death?
A: If you are married and your spouse is listed as your beneficiary, it becomes his or her HSA. If your beneficiary is not your spouse, the HSA ceases to be an HSA effective on the date of your death. The proceeds will be included in the beneficiary's gross income for the year of death.

Q: How do I know whether my expenses are qualified?
A: It is your responsibility to be sure that you are paying qualified health care expenses from your Health Savings Account. The best way for you to be sure if your expenses are qualified is to refer to Section 213 of the IRS Code, under Publication 502: Medical and Dental Expenses. To order IRS Publication 502, call 1-800-829-3676 or go to www.irs.gov. Hills Bank and Trust Company is not responsible for determining if your distributions were used for qualified expenses nor do we provide tax advice.

Q: How do I open a Health Savings Account?
A: Simply stop by any of our Hills Bank locations to fill out the application. Our customer service staff will be glad to answer your questions and help with the paperwork.

Q: How do I pay for my healthcare expenses with my Health Savings Account?
A: Your Health Savings Account is a checking account so you can write checks for qualified expenses. You can also use your Hills Bank debit card anywhere Visa^® is accepted.

Q: How do I know how much money is in my account?
A: In addition to your monthly statements, you can access your account 24 hours a day using Hills Bank Online or Push Button Banker. You may also call Customer Service at 1-800-HILLSBK during banking hours.

Contact us for more information about any of these services.

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131 Main Street, Hills IA 52235 • 1-800-HILLSBK
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