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Health Savings Accounts Health Savings Accounts

The Health Savings Account (HSA) program has two parts: a Consumer Driven Health Plan (CDHP) and an HSA.

A companion of the CDHPs, HSAs will once again be pre-funded by the state. One-half of the state’s contribution will be deposited into participating employee’s accounts. However, for that to happen, employees participating in a CDHP/HSA plan must open an HSA account with Tower Bank.

State contribution to your health savings account in 2010

Maximum Annual
State Contribution
CDHP 1/HSA Single
CDHP 2/HSA Single

If you have an active HSA with Tower Bank and wish to continue receiving the state’s contributions in 2010, you do not need to open a new HSA account with Tower Bank. If you wish to continue contributing to your account or begin contributing for 2010, you need to access your PeopleSoft record and enter your desired contribution. Your contribution amount for 2009 will not carry over to 2010.

HSA Information Presentation

Tower Bank

Health Care Reform and HSAs

If you have been keeping an eye on health care reform, you may have noticed some good news that has come out of the recently approved health care legislation. The law as it now stands will have a minimal impact on Health Savings Accounts (HSAs).

The two pieces of the legislation that impact HSAs both take effect on January 1, 2011:

  1. The definition of an HSA-eligible qualified medical expense will no longer include over-the-counter medications unless prescribed by a physician.
  2. The tax penalty on withdrawals from an HSA that are not used for qualified medical expenses will increase from the current 10 percent to 20 percent.

What’s new at Tower in 2010?

  • Watch for a series of online educational seminars to be offered by Tower Bank later this year. Details will be announced and topics will include basic and in-depth HSA sessions including information on record keeping requirements, eligible expenses and more.
  • Earlier this year all Tower Bank HSA customers were notified that they now have access to their HSA funds via ATM. Cash can be withdrawn for self-reimbursement of expenses paid out-of-pocket or to pay expenses as needed. Receipts for the eligible expense corresponding to the withdrawal should be kept by the customer for his or her tax records.
  • Check out these frequently asked questions about HSAs and Medicare.

More about HSAs

Learn about HSAs with Tower Bank
Learn about Tower Bank's user enhancements to their homepage 
HSA Road Rules for Employees/Individuals
General information about Health Savings Accounts

If you are electing to participate in a HSA for the first time in 2010, you must edit the online HSA option and choose the HSA that corresponds to your medical CDHP election in order to receive the state’s contribution.

View instructions on how to open a health savings account with Tower Bank

State HSA contribution is based on the health savings account maximum contributions

CDHP 1/Single
CDHP 1/Family
CDHP 2/Single
CDHP 2/Family
Health savings maximum $3,050.00 $6,150.00 $3,050.00 $6,150.00
State contribution $1,375.92 $2,750.28 $826.80 $1,650.48
Allowable employee contribution $1,674.08 $3,399.72 $2,223.20 $4,499.52

Catch-up Provision for individuals over 55 is $1,000 for employee

What is a health savings account?

  • An HSA is an individual savings account in your name that allows you to set aside money for current and future medical expenses. It gives you the most benefit from your high-deductible health plan by allowing the use of pre-tax dollars in the payment of medical expenses. Unused funds that you retain in this account accumulate from year to year; there is no "use it or lose it" provision.
  • Eligible expenses that may be paid from this account include doctor's visits and prescriptions and dental and vision expenses. Your Tower Bank HSA also is an interest-bearing account.
  • An HSA can only be established in conjunction with a qualified CDHP. You must choose one of the State of Indiana's qualified plans (CDHP I or CDHP II) in order to be eligible to open an HSA. Other eligibility rules may also apply.
  • Individuals who are enrolled in Medicare*, who can be claimed as a dependent on another person's tax return, who have other insurance coverage that is not a qualifying CDHP, or who have received VA benefits within the previous three months are not eligible to contribute to an HSA. Visit the Tower Bank Web site at or call 888-HSA-TOWR for details about eligibility and other HSA information.
    * - When you turn age 65 and sign up for Social Security benefits, you will automatically be enrolled in Medicare Part A. This will disqualify you from receiving the State’s contribution or making your own contributions into an HSA. You should decline to receive Social Security retirement benefits and decline Medicare Part A if you wish to contribute to an HSA.

Why select a health savings account?

  1. You will pay lower medical insurance premiums.
  2. HSAs provide tax savings three ways - pre-tax contributions through payroll deduction, tax-free earnings (interest) and tax-free withdrawals for qualified medical expenses. Unlike other savings or retirement investment vehicles, if used for approved medical expenses, you will not pay tax on the money spent from your account.
  3. You control your funds. You decide how much of your own money to contribute to the account, which medical expenses to pay and whether to save the money in the account for the future or use it for current expenses.