The 5 HSA Mistakes Too Many People Make

by Andrew Schreiber 25. February 2016

More people are signing up for Health Savings Accounts (HSAs) than ever before. As of the middle of last year, about 14 million Americans were enrolled in one, up 25 percent from 2014. Indeed, the current requirements to qualify for an HSA as an individual are fairly simple: you must be covered under a high deductible health plan (HDHP); that you have no other health coverage (with a few straightforward exceptions); that you aren’t enrolled in Medicare; and that you can’t be claimed as a dependent on someone else’s tax return. And the benefits of participating are enormous: your contributions to an HSA are tax-deferred and portable. 

How to best manage an HSA and your contributions to it, however, are somewhat more complex.

As more employers and individuals turn to HDHPs because of their lower premiums, more individuals are discovering that they are qualified for an HSA. If you’re among them, this list will help shed light on some of the most common mistakes people make with HSAs, and how to avoid them.

Contributing Too Little, Or Too Much

Determining how much to contribute to your HSA is different for everyone, of course, and variables include everything from how much you’re making (read: how much you can afford to contribute) to your current and anticipated medical expenses. The contribution limit for individuals is $3,350 and $6,750 for families in 2016.

One factor in deciding how much to contribute is your own risk tolerance. How concerned or unconcerned do you feel about the possibility of a catastrophic health event that may never occur? Those who feel anxious about the potential medical costs associated with, for example, getting into a car accident, will want to consider contributing a robust amount to their HSA. Those more comfortable with betting they’ll continue to stay healthy, however, or have other significant and pressing monthly expenses, will consider contributing less.

Regardless of how much you choose to contribute, many experts agree that participating is a good idea, since HSAs can be viewed as another way to save for retirement, and because many employers that offer HSAs (by some estimates, as many as 84 percent) make tax-free contributions to employees’ accounts.

Losing Track of the IRS’s Contribution Restrictions

The IRS will penalize you if you contribute too much to your HSA, period. The penalty is a 6 percent excise tax, which accrues every year the excess goes uncorrected. That’s why it’s important to stay on top of how much you’re allowed to contribute from year to year, because these figures do change. For example, the maximum contribution for a family HSA increased by $100 this year. Fortunately, there are ways of correcting the mistake if you have exceeded the maximum contribution amount. You should contact your HSA provider as soon as the mistake is noticed.

Confusing HSA Rules with FSA Rules

There are major differences between HSAs and Flexible Spending Accounts (FSAs), but one wouldn’t be alone in confusing their specific qualities. Among the big ones you’ll want to pay attention to:

Your hard-earned HSA funds can be rolled over to subsequent years’ savings. That is NOT the case with FSA funds, which require participants to spend down the money in their accounts before the end of the year or forfeit those funds entirely.

Your HSA will follow you when you change jobs. With few exceptions, this is not the case with money in your FSA fund.

HSA funds are more flexible in the sense that you can change the amount you choose to contribute at any time. With FSAs, you can only change your contribution amount during open enrollment or under other very specific circumstances.

Misusing HSA Fund Money

Be careful not to swipe that HSA debit card for anything except medical expenses. The IRS frowns on the misuse of HSA funds — to the tune of a 20 percent penalty for non-qualified expenses and liability for income taxes upon withdrawing funds.

Not Correcting Mistaken Contributions or Withdrawals

Fortunately, the IRS accounts for the fact that over-contributing and mistaken charges happen to the most well-intentioned HSA participants, which is why there is recourse if you stumble into one of these circumstances. Say, for example, that you pay a medical bill using funds saved in your HSA that you are later reimbursed for because you didn’t realize that expense was fully covered by your insurance. The money in such cases must be returned, but there is no penalty. It’s that simple.

When used correctly, HSAs provide an excellent option for individuals participating in HDHPs. But determining how much you wish to contribute per month, what expenses can be covered by HSA funds, and more can be complicated to unravel. Resources like our “HSA: Is It Right for You?” guide can help you determine what will work best for you. Or, reach out —we’re here to help you maximize your HSA’s potential.

Top ATM Safety Tips

by Andrew Schreiber 16. April 2015

ATM Safety

When you’re at an ATM, you may feel somewhat vulnerable. It’s important to acknowledge your vulnerable state and take steps to minimize your exposure. Here are some tips to help you stay safe at an ATM.

Be aware of your surroundings.

It’s best to use an ATM in a well-lit area that is visible to others. Avoid ATMs that are not facing the road or have blind spots (i.e. on the corner of a building). In addition to the location of the ATM, it’s also important to be wary of any suspicious people or situations nearby. If you feel the least bit uncomfortable, leave and find another ATM.

Put your cash away immediately.

If you are withdrawing money, you should put it away immediately once the cash has been dispensed. You’re probably thinking that it’s important to count the cash to make sure it is the right amount. Yes, it is important to count the cash, but do so in a safe area. You should never count it in a public area.

Limit your time at the machine.

You should go to an ATM with a “game plan.” What is your purpose for going to the ATM? Are you making a deposit, withdrawing money, transferring money, or checking your balance? Whatever your reason to use the ATM, make sure you complete your transaction in a timely matter. The less time you are in a vulnerable position, the better.

Daytime is better than nighttime.

I understand no one plans their day around going to the ATM. However, it is better to go to the ATM during the day. Typically, there is more activity and better visibility during the day. If you have to go at night, make sure it is a visible location and is well lit.

If you found this article useful, be sure to check out these related articles:

It's Fraud Season: Protect Yourself

How Identity Thieves Steal Your Information

Things to Do before You Leave the Country

How to Find the Perfect Checking Account

by Andrew Schreiber 10. February 2015

Perfect Checking Account

In today’s banking world there are many variations of a simple checking account that offer different features and benefits. Most of the time you rely heavily on your bank’s recommendation as to what account works best for you, or you just default to the account that has the least amount of requirements. However, defaulting to the product with the least amount of requirements could be detrimental to you as a customer. You might be eligible for interest on your balances, free ATMs, free checks, etc. The following questions can help guide you to the best product for you:

Will you have a direct deposit into your checking account?

Having a direct deposit is becoming a more popular requirement of accounts in order to avoid a monthly service charge. The majority of companies offer direct deposit of payroll to their employees. Having a direct deposit is a benefit in and of itself; you don’t have the hassle of going to the bank to deposit your paycheck every payday. The funds transfer right into your account and are available to you that night.

A good account if you have a direct deposit would be our Classic Direct Deposit Checking account.

What is the average balance you keep in your checking account?

Maybe you like to keep some extra money in your checking account in case of emergencies. This extra money could make you eligible for a checking account that has some added benefits. No one knows the balance you keep in your accounts better than yourself.

If you keep extra money in your checking account, look for a high balance checking account you might be eligible for. Here at 1st Mariner you might fit into our 1st Select Checking account.

Will you be opening additional relationships with the bank?

Many bank customers have more than just a checking account with their bank. They have a checking account, a savings account, maybe a CD, or even a money market account. If you have a variety of products with your bank you could be eligible for a product that takes that into consideration. Take your entire relationship into consideration when you select a checking account because you may be eligible for a checking account with more features if you have other accounts with the bank.

Here at 1st Mariner Bank, if you have a minimum relationship balance of $10,000 you would be eligible for our Premier Relationship Checking account.

If you found this article useful, be sure to check out these related articles:

4 Ways to Avoid Overdrawing Your Account

3 Things to Consider when Choosing a Bank

Bank Jargon 101

© 2008- 1st Mariner Bank