SETTING UP YOUR HSA
Synopsis by Dave Ballard Insurance
What do I have to do to “establish” my
account?
Your account trustee/custodian will determine what you need to do, which may
include completing and processing appropriate paperwork, and making a minimum
deposit.
Who can help me establish my account?
Insured banks and credit unions are automatically
qualified to handle HSAs. Any bank, credit union or any other
entity that currently meets the IRS standards for being a trustee
or custodian for an IRA or Archer Medical Savings Account (MSA)
can be an HSA trustee or custodian. The law also allows insurance
companies to be HSA trustees or custodians.
My bank/credit union doesn’t offer HSAs,
can I be my own trustee or custodian?
No, you must establish your HSA with
an approved institution.
I can’t find a bank or credit union to open
my account, what can I do?
Unfortunately, we cannot maintain a list
of banks, credit unions or other institutions offering HSAs. We
recommend checking websites like www.hsainsider.com for
companies who are willing to establish your account regardless of
where you live.
What is the difference between an HSA “custodian” and
an HSA “trustee”?
The differences between a “custodian” and a “trustee” are
minor. A trust is a legal entity under which assets are actually
owned and held on behalf of a beneficiary. The trustee has some
level of discretionary fiduciary authority over the assets of the
fund. The trustee must exercise that authority in the best interests
of the beneficiary. A custodial arrangement, on the other hand,
is like a trust, but the custodian simply holds the assets on behalf
of the owner of the assets. Other than holding the assets and doing
as the owner orders, the custodian has no fiduciary obligations
to the owner. The determination of what constitutes a trust or custodial
arrangement is a determination made under state law.
Can couples establish a “joint” account
and both make contributions to the account, including “catch-up” contributions?
“ Joint” HSA accounts are not permitted. Each spouse should consider
establishing an account in their own name. This allows you to both make catch-up
contributions when each spouse is 55 or older.
Must couples open separate accounts?
If both husband and wife are eligible
to contribute to an HSA, they are both eligible to establish separate
HSAs. However, if both spouses want to make “catch-up” contributions
when they are age 55+, they must establish separate accounts.
How soon can I open my account?
Your account can be established as early
as the effective date of your HDHP coverage. However, if your
coverage begins on any day other than the first day of the month,
you cannot establish your account until the first day of the following
month.
I want to make sure my HSA is “established” as
soon as possible. Can I establish my account before my HDHP
coverage begins?
You can complete all the paperwork and
make a minimum deposit to your account prior to the effective date
of your HDHP coverage. However, your account is not officially “established” until
your HDHP coverage begins. But completing the necessary steps before
your coverage begins ensures that your HSA will be “established” as
early as possible. This is especially important when your HDHP coverage
is effective on a non-business day.
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