Tax Benefits of Health Savings Accounts

by Bryan Kisiel, CPA®

While similar to FSAs (Flexible Savings Plans) in that both allow pretax contributions, Health Savings Accounts or

HSAs offer taxpayers several additional tax benefits. Let's take a look:

What is a Health Savings Account?

A Health Savings Account is a type of savings account that allows you to set aside money pretax to pay for qualified medical expenses. Contributions that you make to a Health Savings Account (HSA) are used to pay current or future medical expenses (including after you've retired) of the account owner, their spouse, and any qualified dependent. There are several caveats that individuals should be aware of, however, such as: • Medical expenses that are reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return are not eligible. • You cannot be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care, and you cannot be claimed as a dependent on someone else's tax return. • Spouses cannot open joint HSAs. Each spouse who is an eligible individual who wants an HSA must open a separate HSA. • Insurance premiums for taxpayers younger than age 65 are generally not considered qualified medical expenses unless the premiums are for health care continuation coverage (such as coverage under COBRA), health care coverage while receiving unemployment compensation under federal or state law.

Tax-Advantaged Savings Accounts

Health Savings Accounts (HSAs) offer a triple tax advantage: • Contributions are made pretax. • Growth is tax-free. • Distributions are tax-free as long as they are used for qualified health care expenses. Contributions to an HSA, which can be opened through your bank or another financial institution, must be made in cash. Contributions of stock or property are not allowed. An employee may be able to elect to have money deposited directly into an HSA account through payroll withholdings. If your employer does not offer this option, you must wait until filing a tax return to claim the HSA contributions as a deduction. Unlike contributions to FSAs, you may change the amount withheld at any time during the year as well, and unused funds automatically roll over into the next calendar year (there is no "use it or lose it"). Funds in the account may be invested much like any other retirement savings account; however, less than 10 percent of account holders do so, according to the Employee Benefit Research Institute. Whether funds can be invested depends on whether the HSA administrator offers this option. There may also be a minimum balance requirement, which could limit individuals with smaller account balances.

High Deductible Health Plans

However, a Health Savings Account is not available to everyone and can only be used if you have a High Deductible Health Plan (HDHP). Typically, high-deductible health plans have lower monthly premiums than plans with lower deductibles, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible).

A high-deductible plan can be combined with a health savings account, allowing you to pay for certain medical expenses with tax-free money that you have set aside. Using the pretax funds in your HSA to pay for qualified medical expenses before you reach your deductible and other out-of-pocket costs such as copayments reduces your overall health care costs. Calendar year 2021. For the calendar year 2021, a qualifying HDHP must have a deductible of at least $1,400 for self-only coverage or $2,800 for family coverage. The beneficiary's annual out-of-pocket expenses, such as deductibles, copayments, and coinsurance, are limited to $7,000 for selfonly coverage and $14,000 for family coverage. This limit doesn't apply to deductibles and expenses for out-ofnetwork services if the plan uses a network of providers. Instead, only use deductibles and out-of-pocket expenses for services within the network to figure whether the limit applies. Last-month rule. Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). You can make contributions to your HSA for 2021 until April 15, 2022. Your employer can make contributions to your HSA between January 1, 2022, and April 15, 2022, that are allocated to 2021. The contribution will be reported on your 2021 Form W-2.

Summary of HSA Tax Advantages

• Tax deductible. You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you don't itemize your deductions on Schedule

A (Form 1040). • Pretax dollars. Contributions to your

HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.

• Tax-free interest on earnings.

Contributions remain in your account until you use them and are rolled over year after year. Any interest or other earnings on the assets in the account are tax-free.

Furthermore, an HSA is "portable" and stays with you if you change employers or leave the workforce. • Tax-free distributions. Distributions may be tax-free if you pay qualified medical expenses.

• Additional contributions for older

workers. Employees aged 55 years and older are able to save an additional $1,000 per year.

• Tax-free after retirement.

Distributions are tax-free at age 65 when used for qualified medical expenses including amounts used to pay Medicare Part B and Part D premiums, and long-term care insurance policy premiums. You cannot, however, use money in an HSA to pay for supplemental insurance (e.g.,

Medigap) premiums.

Help is Just a Phone Call Away

Please contact the office if you have any questions about health savings accounts.

Bryan Kisiel, CPA® CEO, Kisiel & Associates Director of Tax Planning, SecondHalf Coach Wealth Management

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The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.

by Bree Edgerly

Meeting at The White Rabbit

(Photo Courtesy of SkySight Photography) Brian Lawrence, Chad Amond, Jim Smith and Jason Rigone (photographed

L to R) collaborating their community efforts over coffee at The White

Rabbit Cafe in downtown

Greensburg. The cafe is a vibrant example of the type of entrepreneurial business that these four men work daily to attract to Westmoreland County through the strategies of “Reimagining Our Westmoreland.”

ACTION! ACTION! ACTION!LIGHTS, CAMERA,

The Backstage Crew on the Set of Westmoreland County

Behind the scenes of most good things, there are teams of dedicated individuals contributing their energy and skill sets to make them happen. An impressive performance is the culmination of not only the actors on set, but all the individuals who dedicated their time to building the sets, running the lights, marketing the show so that the seats were filled, preparing costumes and styling, writing the scenes, and the list goes on. The stage of our lives is much the same — behind the scenes of the county where you live are a multitude of individuals and organizations that invest their energy into pooling their resources to make our neighborhoods safe, our recreational spaces attractive, our downtowns thriving and our economies sustainable now and into the future. But also much like a stage performance, most people move through their days unaware of the mountain of work that is happening behind the scenes to make their world go.

In Westmoreland County, an incredible cohort of 19 community professionals banded together in 2016 with the 6 members of the county’s Department of Planning & Development Planning Division and 3 County Commissioners to research and analyze the economic status of our county and spearhead the development of a comprehensive plan that would lay the groundwork for a prosperous future. In addition to collecting and studying statistical, census-type data on the demographics and economic trends within the county, the committee worked hard to uncover what mattered most to residents and business owners by engaging over 5,000 individuals from the community through several phases of public dialogue including 34 community workshops and 11 focus groups. After two years, the committee laid out seven core objectives achieved through a total of 38 strategies in an official comprehensive plan branded “Reimagining our Westmoreland” that was adopted by the County of Westmoreland Board of Commissioners on December 20, 2018.

Why did Westmoreland County need a comprehensive plan? Demographic research unveiled a dramatic population shift over the last 50 years, starting in the 1970s when many residents moved out of the county to find work after the collapse of the prominent manufacturing industries that laid the foundation for our county’s early thriving economy. Concurrently across the nation, a trending shift toward decreased family sizes and childrearing rates coupled with this wave of migration out of the county and have resulted in a population change that leads to significant challenges for Westmoreland’s economic development and workforce. “Reimagining Our Westmoreland” outlines strategies to reinforce and perpetuate our county as the place to live, work and play today and well into the future by attracting, developing and retaining a diverse and stable workforce that will sustain a healthy economy.

While county residents go about their days benefiting from the abundant amenities of our community, there are many individuals diligently at work not only making sure those amenities are in place, but that our communities are positioned to continue to grow. The Comprehensive Plan Annual Reports highlight Strategy Champions, organizations that have identified themselves as strategic partners and have been active in implementing strategies of “Reimagining Our Westmoreland.” The rest of this article aims to recognize some of these strategy champions and hear from their leaders about how their organizations are working to achieve the action statements of the plan.

At the forefront of the strategy champions are two members of our county government: Jason Rigone, Director of the County Planning Division and Executive Director of the Westmoreland Industrial Development Corporation (WCIDC), and Brian Lawrence, Executive Director of the Redevelopment Authority of the County of Westmoreland (RAWC) and Land Bank (WCLB). Between the two of them, they not only were leaders in the development of the plan, but they also actively implement strategies through the WCIDC and RAWC, government agencies that work hand in hand to promote economic growth through job creation and to reenergize the county’s core communities by enticing new business, residential and recreational opportunities. While the WCIDC primarily focuses on development of industrial parks within the county, the RAWC and WCLB’s reaches extend into the residential category as they assist in community revitalization efforts and implement a multitude of programs centered around their mission of building healthy and whole communities by eliminating blight and its influences in our communities. More information on these organizations’ initiatives can be found at https://co.westmoreland.pa.us/668/ Westmoreland-Development-Council/.

“Reimagining our Westmoreland” is spearheaded by the Planning Department, but its implementation would not be possible without the support and partnership of various municipalities, organizations, local businesses and nonprofits. Similar in mission to the WCIDC and RAWC, The Economic Growth Connection of Westmoreland (EGC) is a “private non-profit membership based organization created to foster economic growth and development in Westmoreland County…to raise the standard of living through sustainable high quality job creation and retention.” Jim Smith, President and CEO of the EGC, served as a member of the Comprehensive Plan Advisory Committee. The EGC has played a crucial role in the distribution of millions of dollars to small businesses through any number of support and relief programs. To learn more about the EGC’s efforts to support small businesses, visit https://egcw.org/.

Also working hard to provide resources for local businesses, The Westmoreland County Chamber of Commerce “builds strong partnerships among regional business leaders, community leaders, elected officials and key stakeholders on a variety of important issues facing our community… maintains a robust business-friendly advocacy platform and provides members with a variety of networking events, group purchasing and professional development opportunities.” Chamber President and CEO Chad Amond also served on the Comprehensive Plan Advisory Committee. The Chamber partners closely with the WCIDC, RACW, EGC and a multitude of other similar organizations to make Westmoreland County a more attractive place to do business. Their website (https:// westmorelandchamber.com), newsletters and events serve as key marketing spaces for local businesses to promote their services as well as post employment opportunities.

Information regarding “Reimagining Our Westmoreland” is sourced directly from the Comprehensive Plan and Annual Reports. To view the Comprehensive Plan and Annual Reports in full online, open your camera on your smartphone and scan the QR code to access the link.

Backstage Pass Interviews

Before (Photo Courtesy of City Cribs LLC) After (Photo Courtesy of Wight Elephant Boutique)

Cultivate the entrepreneur, the builder and the entertainer

Bree: What do you think is the most impactful service that the chamber offers to help cultivate the entrepreneur?

Chad Amond: I would have to say, it’s having the ability to be part of an organization that helps not only with networking and promoting small businesses but being part of an organization that promotes the area in general. The Chamber is uniquely involved and has relationships with local government officials.

Bree: Why is Westmoreland County the place to start a business?

Jim Smith: Westmoreland County offers a number of advantages for starting a new business. In addition to the quality school districts, with their associated career and technical centers, the county has five institutions of higher education. The county currently has 19 industrial parks – more than any other county in Pennsylvania; an excellent highway system that puts companies within 500 miles of half the population of the United States and Canada; a shortline railroad that connects with three class one carriers; and an airport! In short, Westmoreland has everything that companies need. Build vibrant communities, plan for and expect well-designed places

Bree: What is a recent project of one of your organizations that you feel has offered residents a quality opportunity for recreation?

Brian Lawrence: The Westmoreland County Land Bank demolished a blighted, abandoned property next to the Sutersville Community Park and expanded the park with a new “Play Express” train play set. The demolition, park expansion and new playground equipment were paid for through donations and grants from the Community Foundation of Westmoreland County and Keep Pennsylvania Beautiful.

(Photo Courtesy of SkySight Photography) The Westmoreland Museum of American Art has been a nationally recognized cultural destination for decades, drawing visitors from all over the world into Westmoreland County for its diverse exhibitions and educational programs since 1959. Undergoing a major renovation in 2015, The New Westmoreland “offers a place to share compelling and meaningful cultural experiences that open the door to new ideas, perspectives and possibilities.”

(https://thewestmoreland.org/)

(Photo Courtesy of Jay Bell, Bella Terra Vineyards) Bella Terra Vineyards was founded in 2015 in Hunker as an event venue and has rapidly grown over the past 6 years into an awarded local industry leader in the production of canned wines. The continued expansion of their facilities features The Igloos at Bella Terra, offering guests a unique opportunity for heated outdoor dining throughout the winter months.

Create unique and inviting places to play Plug into technology and innovation

Bree: How are we cultivating diversity in Westmoreland County?

Chad Amond: Comprehensive Plan Strategy 2.3 specifically lays out policies, programs and projects to “Welcome Everyone.” The non-profit Westmoreland Community Action has acquired grant money to support initiatives and is taking the lead on building programming for making Westmoreland County a more welcoming and diverse place. The Welcoming Westmoreland Program has two committees: The Welcoming Committee is focused on business and marketing initiatives while the Diversity & Inclusivity Committee is focused on developing training resources, policies and codes of ethics for use in businesses and the community.

Bree: The balance of supporting development while preserving high quality open spaces and natural assets can be challenging – how does the WCIDC maintain this balance?

Jason Rigone: Successful and prospering communities rely on both open spaces and development; the two concepts don’t necessarily have to be competing ideas, rather, indirectly one supports the other. One of the most important elements of economic development is a skilled and growing labor force: without people developing new technology, working tools and equipment, teaching our children or providing healthcare to our loved ones, we wouldn’t have much of an economy. Largely, people are deciding where to live based on the location’s amenities, including access to natural assets like our wild places in the Laurel Highlands and on our pristine rivers like the Yough and Kiski.

Directing development to locations and along corridors that have existing infrastructure is key to limiting impact on the county’s sensitive areas, reducing costs and increasing efficiencies. As an example, the WCIDC recently completed the Commerce Crossing at Westmoreland development in Sewickley Township. This location, formerly used in part for industrial activity, was identified as a priority development location because of its existing and direct access to highways and railroads, maximizing opportunities while minimizing impact. We as a county through open dialogue have to clearly decide on what areas are vital to preserve and what can support future development.

Bree: Across the industrial park system of Westmoreland County, what are some different types of businesses WCIDC have brought into the county?

(Photo Courtesy of Westmoreland County Community College) “The new WCCC Advanced Technology Center is poised to become a community, workforce and economic development asset to help grow the manufacturing industry in the region. Occupying 73,500 SF of space at RIDC Westmoreland Innovation Center in Mount Pleasant, the ATC provides affordable, hands-on learning to prepare WCCC students and incumbent workers for highdemand, technically oriented careers in manufacturing, energy and other sectors.” (https://www.co.westmoreland.pa.us/2160/ Advanced-Technology-Center)

Jason Rigone: Although our industrial park system is designed to assist the manufacturing related industries, what we’ve experienced is that numerous use types have located and invested at any one of our park locations: office and administrative, warehouse/distribution, technology and R&D, and service based. It’s easy to point to those publicly traded, multinational corporations that have headquarters in our parks like Siemens, Philips, ABB, Dick’s Sporting Goods or Baker Hughes, but we really appreciate the homegrown companies that have seen tremendous growth like Asset Genie in our South Greensburg Commons location or Poly Concept North America in the Business and Research Park. These companies were started locally and have grown to six-figure employers having a tremendous impact on the local economy. While we continue to support our traditional industries, we have the opportunity to see real growth in the areas of robotics, AI and especially autonomous vehicles.

Bree: Explain the Forum for Workforce Development and how it is forging partnerships between employers and the education system to maintain the young workforce within our county.

Jim Smith: The Forum for Workforce Development is a collaborative effort between education, industry, non-profits, and economic development. The goal is to better align education and industry to provide our students with opportunities to grow their careers in the region. We accomplish this by providing pathways to regional career clusters; career exploration opportunities with virtual reality career tours which make accessibility for all students possible in the age of covid; partnering with other counties to make this a truly regional effort; and ensuring that industry and education have a line of communication to make sure that we are providing the right skills that are needed for a truly world-class workforce.

Enjoy nature and wide open spaces

Bree: Does the Land Bank have any current projects to remedy blight with new Green Space within the county?

Brian Lawrence: The Land Bank is assisting in the demolition of some of the older structures at Ligonier Beach property to support the revitalization of that asset into a regional attraction once again. The property was damaged in 2017 and has since been sold to the township of Ligonier that is working closely with the non-profit “Friends of Ligonier Beach”on a plan to convert the existing swimming pool into a natural filtration swimming pool at the center of a nature-based recreation destination that will potentially include a pier for fishing on Loyalhanna Creek, a connection to the Ligonier Valley Trail, a pollinator garden, a new restaurant/ special event building and a new ecosystem education center.

(Photo Courtesy of SkySight Photography) Westmoreland County is abundant with natural assets. One of the seven core objectives within “Reimagining our Westmoreland” is dedicated to strategies championing our connection with parks and nature. (Photo Courtesy of GO Laurel Highlands) GO Laurel Highlands worked with Westmoreland County officials to install creative artwork around the Arnold Palmer Regional Airport in Latrobe to showcase the plethora of recreational and cultural opportunities the area has to offer.

Tell the world Westmoreland County is expecting you!

Another strategy champion and important marketing resource to Westmoreland County businesses is GO Laurel Highlands (GO LH). Focused on recreation and tourism, “GO LH implements year-round seasonal marketing campaigns throughout the Northeast and MidAtlantic to enhance awareness of the Laurel Highlands as a travel destination, which increases overnight stays, generates jobs and contributes to the economic growth and quality of life for the region.”

GO LH’s robust website (http://golaurelhighlands.com) serves as the go-to guide for lodging, events, activities, dining, outdoor recreation and parks, arts and culture. The Laurel Highlands won 3rd place for the Overall Emerging Destination in 2020 by internationally recognized travel blog, TravelLemming.com. “Westmoreland County is the home of Fred Rogers and Arnold Palmer, the birthplace of the banana split, and home to the only two Frank Lloyd Wright homes in Pennsylvania open to overnight lodging,” said Executive Director Ann Nemanic. “Any opportunity to be recognized globally is an extreme honor.”

In collaboration with the WCIDC and Westmoreland County Chamber of Commerce, GO LH has also been a part of creating and promoting our new county brand: Discover Westmoreland. According to the Discover Westmoreland Director Jessica Petrovich, “We believe that sharing the positive, local, inspiring stories of individuals, organizations and businesses around Westmoreland County will spur current and future residents to truly discover more about this place we call home. These efforts will lay the foundation for diverse, extensive branding and marketing efforts for Westmoreland County in the years to come and beyond.”

To visit the GO Laurel Highlands website, open the camera on your smartphone, scan the QR code & plan your next adventure!