Health Savings Accounts

Curb your medical costs with an HSA.

Health Savings Accounts

Curb your medical costs with an HSA.

At M&F Bank, we’re in a prime position to offer Health Savings accounts (HSAs) to individuals, Third Party Administrators (TPAs), agents, brokers & employers.

With lower fees, a wide selection of service options, and our experience with custodial accounts, M&F Bank offers clear advantages over other HSA providers.

What is a Health Savings Account?

A Health Savings Account (HSA) is a tax-advantaged personal savings account that gives individuals an opportunity to set aside pre-tax income to use specifically for health expenses. Unlike medical flex plans, money in an HSA can earn interest, is tax deferred, and any money not used by the end of the year rolls over to the next year.

HSAs are designed for individuals who have high deductible health plans and account owners can use the money for a variety of health-related expenses including eyeglasses or contact lenses, non-prescription medications, therapy, medical equipment, diagnostic testing, etc.


HSAs can help curb medical costs, reduce taxable income, and even plan for retirement income.

Triple Tax Advantage

Tax-free contributions: Contributions are typically made with pre-tax dollars, through payroll deductions at your employer. As a result, they are not included in your gross income and are not subject to federal income taxes. In most states, contributions are not subject to state income taxes.

Tax-free gains: Any interest or other earnings on the money in the account is tax free.

Tax-free withdrawals: Withdrawals from your HSA are not subject to federal (or in most cases, state) taxes if you use them for qualified medical expenses.

You’re In Control

You decide how much you’d like to save in your account (up to the IRS contribution limit) and which qualified expenses to pay using your HSA.

It Goes Where You Do

The money in your HSA remains available even if you change health insurance plans, go to work for a different employer, or retire. Your funds never expire, so you can use them to pay for qualified expenses throughout your life.

Carry Over

Any unused balance carries over from one year to the next.

HSA Frequently Asked Questions

How does an HSA plan work?

An HSA works in conjunction with high deductible health insurance.

Your HSA dollars can be used to help pay the health insurance deductible and any qualified medical expenses, including those not covered by the health insurance, like dental and vision care.

Any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate, plus 20% tax penalty.

Once you meet your calendar-year deductible, the health insurance pays remaining covered expenses in accordance with the terms and conditions of your particular plan. Some plans pay 100% of covered expenses after the calendar-year deductible is met.

Who can have an HSA?

You must:

Be covered by qualified high deductible health insurance plan;

Not be covered under other health insurance;

Not be enrolled in Medicare; and

Not be another person’s dependent.



Other health insurance does not include coverage for the following: accidents, dental care, disability, long-term care, and vision care.

Workers’ compensation, specified disease, and fixed indemnity coverage is permitted.

Are there HSA management fees?

Yes, if the minimum daily balance is under $2,000 there is a $4.00 charge each month.

What is a qualified medical expense?

A qualified medical expense is one for medical care as defined by Internal Revenue Code Section 213(d). The expenses must be primarily to alleviate or prevent a physical or mental defect or illness, including dental and vision.

Most expenses for medical care will fall under IRC Section 213(d). However, some expenses do not qualify. Some examples are:

Surgery for purely cosmetic reasons

Health club dues

Illegal operations or treatment

Maternity clothes

Toothpaste, toiletries, and cosmetics

HSA money cannot generally be used to pay your insurance premiums. See exceptions under “Can my HSA be used to pay premiums?”.

*See IRS Publications 502 (“Medical and Dental Expenses”) and 969 (“Health Savings Accounts and Other Tax-Favored Health Plans”) for more information.

Are there adjustments for inflation?

Yes, the tax law requires an annual Cost of Living Adjustment (COLA) based on changes in the Consumer Price Index. This calculation, rounded to the nearest $50 increment, affects deductible limits, maximum out-of-pocket amounts, and the maximum annual HSA contribution limits. Health insurance deductibles may change by the COLA each year.

Can I have an HSA and an IRA?

Yes, having an HSA in no way restricts your ability to have an IRA.

What are the tax deductible contribution limits?

The 2024 annual HSA contribution limit is $4,150 for individuals with self-only High Deductible Health Plans (HDHP) coverage and $8,300 for individuals with family HDHP coverage. Individuals aged 55+ may contribute an additional $1,000 for each tax year. 

Do HSA plans work with physician and provider networks?

Yes. These networks are very often part of the health insurance plan, and they provide discounts on health care. The discounts apply to all care — even prior to meeting the health insurance deductible. So, your HSA plan savings go further.

Can my HSA be used for dependents not covered by the health insurance?

Generally, yes. Qualified medical expenses include unreimbursed medical expenses of the accountholder, his or her spouse, or dependents.

Can I make withdrawals for unqualifed medical expenses?

Withdrawals for unqualified medical expenses from your health savings account are taxable income and subject to a 20% tax penalty.


There is no additional tax on distributions made after the date you are disabled, reach age 65, or die.

Can my HSA be used to pay premiums?

No, this would not be a qualified medical expense, subject to taxes and penalty.


No penalty or taxes will apply if the money is withdrawn to pay premiums for:

Qualified long-term care insurance; or

Continuation of coverage plans, like COBRA, required under any federal law; or

Health care coverage while receiving unemployment compensation under federal or state law; or

Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).

What are the tax benefits?

There are three major tax advantages to your HSA.

Cash contributions to an HSA are 100% deductible from your federal gross income (within legal limits).

Interest on savings accumulates tax deferred.

Withdrawals from an HSA for qualified medical expenses are free from federal income tax.

When can I start to use the funds in my HSA?

Once your account is open, a deposit has been made to your account and funds are available, you can start using your HSA. You are 100% vested as soon as the funds are deposited and you have total control over the funds.

What expenses are qualified for reimbursement from my HSA?

You are eligible to receive tax-free reimbursement for qualified health expenses not covered by your insurance as defined by Section 213(d) of the Tax Code. A list of these expenses is available at https://www.irs.gov/publications/p502.

HSA distributions used for any purpose other than the qualified medical expenses listed will be taxable, and the appropriate tax rules will apply.

What about “catch up” contributions for those 55 and older?

Individuals aged 55 and over may contribute an additional $1,000 above the maximum for each tax year.

Is it true that individuals 65 or older can take out funds from their HSA plan for any reason without a penalty?

If an individual is age 65 or older, regardless of whether the individual has been enrolled in Medicare, there is no penalty to withdraw funds from the HSA.

As always, normal income taxes will apply if the distribution is not used for unreimbursed medical expenses (expenses not covered by the medical plan).

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