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#1129618 - 02/13/09 04:03 PM Health Savings Accounts - Overdrafts
kburrows Offline
Junior Member
kburrows
Joined: Nov 2006
Posts: 35
Iowa
How does your bank handle overdrafts on a Health Savings Account?

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Operations Compliance
#1129632 - 02/13/09 04:09 PM Re: Health Savings Accounts - Overdrafts kburrows
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
If you are smart, you will not allow them at all. It presents a number of issues, including excesive contributions, etc. It would be like allowing someone to overdraw their IRA account.
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#1131627 - 02/18/09 04:25 PM Re: Health Savings Accounts - Overdrafts rlcarey
kburrows Offline
Junior Member
kburrows
Joined: Nov 2006
Posts: 35
Iowa
Yes, I am aware of that, but I am wondering what other institutions are doing to prevent overdrafts. For example, do you not allow fees to overdraw the HSA? Do you close the HSA if it ever becomes overdrawn? We are closing the HSA even if it has become overdrawn by a $2 fee, for example, and we are getting a lot of push back from our corporate customers (whose employees set these up) claiming that other financial institutions do not require the account be closed.

We close and report a prohibited distribution of the fair market value of the HSA as of January 1 of the year of the overdraft.

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