This material should be regarded as educational information on healthcare considerations and is not intended to provide specific healthcare advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.
Neither Bank of America nor any of its affiliates or employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
Please consult with your own attorney or tax advisor to understand the tax and legal consequences of establishing and maintaining an HSA account, Health FSA, and/or HRA plan.
Please be aware that opening a Health FSA could disqualify you from subsequently establishing a Health Savings Account (HSA). However, your employer may sponsor a “limited reimbursement” Health FSA that would not disqualify you from establishing an HSA. Contact your tax advisor or employer for more information. Bank of America acts solely as claims administrator performing administrative tasks pursuant to an agreement with, and at the direction of, the employer. Bank of America does not sponsor or maintain the Health FSA, and does not provide tax, legal or accounting advice.
You can take tax-free distributions for qualified medical expenses for you, your spouse and any dependents at any time, including after age 65. The Internal Revenue Service publishes a list of qualified expenses in Publication 502, Medical and Dental Expenses available at irs.gov. If you use distributions before age 65 for non-qualified medical expenses, those withdrawals are subject to ordinary income tax plus an additional 20 percent federal tax (although the additional 20 percent tax will not apply under certain circumstances). At age 65 and thereafter, you can withdraw funds for non-medical expenses without paying the additional 20 percent federal tax. However, you’ll still pay ordinary income tax on withdrawals used for non-medical expenses. If you die, your HSA balance can be transferred to your spouse without taxes due. If your HSA assets transfer to a beneficiary other than a spouse, the beneficiary must report those HSA assets received in his or her gross income. If no beneficiary is available, HSA assets transfer to your estate and can be used for up to one year to pay for qualified medical expenses incurred before death.