What is a Health Savings Account (HSA)?
Health Savings Accounts (HSA's) are a new way for consumers to pay for medical expenses. As of January 1, 2004, almost anyone with a qualified high-deductible health insurance policy can also have a Health Savings Account. HSA's can save you money on your medical care now as well as provide a good way to save for future medical expenses. HSA funds can pay for expenses before you meet your deductible as well as helping pay for services not covered by your health plan, COBRA coverage during periods of unemployment, medical expenses after retirement and long-term care expenses, to name just a few.
Your high-deductible health plan (HDHP) can be one you get through your employer or a policy you buy on your own from a health insurance company. Even if you get your high-deductible health plan or even your HSA account through your employer, you own the HSA account. You decide how much to contribute, how much of the account to use for medical expenses, and which medical expenses to pay from your account. You also choose whether to pay for medical expenses from the account or save it for future use. Even if you change jobs, your Health Savings Account is still yours.
|
How a Health Savings Account Plan Works
|
|
|
|
Deposits in Health Savings Accounts are 100% tax deductible | | |
For calendar year 2009, to qualify to open an HSA, your HDHP minimum deductible must be at least $1150 (self-only coverage) or $2,300 (family coverage). The annual out-of-pocket (including deductibles and co-pays) cannot exceed $5,800 (self-only coverage) or $11,600 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and copays & coinsurance) for non-network services.
For calendar year 2010, the limitation on HSA tax deductions for an individual with self-only coverage under a HDHP is $3,050 per year. For family coverage under a HDHP, the maximum tax deduction is $6,150 per year. If you are over 55, you can contribute an additional $1000 per year. See chart below.
The following table summarizes the HSA plan changes for 2009
|
Federal Changes |
2009 |
2010 |
|
Maximum Contribution Amounts |
$3,000 Individual/$5,950 Family |
$3,050 Individual/$6,150 Family |
|
Minimum Deductibles |
$1,150 Individual/$2,300 Family |
$1,200 Individual/$2,400 Family |
|
Maximum out-of-pocket |
$5,800 Individual/$11,600 Family |
$5,950 Individual/$11,900 Family |
|
Additional contribution for insureds age 55 or older |
$1,000 |
$1,000 |
|
Can I roll over unused funds from an FSA or HRA? |
Yes, regulations now allow you to roll over unused funds from an FSA or HRA on a one-time basis. Please talk to your employer or third-party administrator for specific details. |
Yes, regulations now allow you to roll over unused funds from an FSA or HRA on a one-time basis. Please talk to your employer or third-party administrator for specific details. |
|
Can I transfer funds from an IRA to my HSA? |
Yes, regulations allow a one-time rollover from an IRA to an HSA, up to the annual HSA contribution maximum. Prior to transferring funds, please consult your tax advisor to discuss the benefits and tax reporting requirements |
Yes, regulations allow a one-time rollover from an IRA to an HSA, up to the annual HSA contribution maximum. Prior to transferring funds, please consult your tax advisor to discuss the benefits and tax reporting requirements. |
Unlike some other types of accounts, you don't lose HSA funds at the end of the year. Unspent balances remain in your account earning interest until you spend them on medical care. You can even invest your HSA contributions in stocks, bonds and mutual funds as you do for an IRA account. You'll want to shop around for the best value for your health care dollars.
You can keep the HSA account even if you move to another state, and you can continue to keep it as you grow older. Regardless of where you get your health insurance plan, whether on your own or through your employer, your Health Savings Account funds are yours. This will be a strong incentive for you to spend wisely on your medical care, just like you do on other items you purchase.
Is an HSA for you? If you are currently on a traditional health plan, click here for a spreadsheet or here for a web link to compare your current plan to an HSA plan. You may be surprised how much an HSA plan can save you.
If you want to use your HSA as a secondary retirement account instead of a medical reimbursement account, click here to calculate how much you can save over time in your HSA account. To see this information in spreadsheet format, click here.
Click here for a complete library of additional information on HSA's presented by HealthDecisions.org
If you would like to see an interesting movie that explains HSA's in easy to understand terms, click here .
For a copy of IRS Publication 969 - "Health Savings Accounts and Other Tax- Favored Health Plans", click here. For a copy of IRS Form 8889 - "Health Savings Accounts" which is filed with your tax return, click here.
To see how much money an HSA will enable you to save on your taxes based on your filing status and income, click here.
On December 20, 2006 President George W. Bush signed the Health Opportunity Patient Empowerment Act of 2006 enhancing Americans' access to tax-advantaged health care savings. The law, part of the Tax Relief and Health Care Act of 2006, gave Health Savings Accounts dramatic improvements. Click here to see a summary of these improvements.
The Healthcare Blue Book is a free consumer guide to help you determine fair prices in your area for healthcare services. If you pay for your own healthcare, have a high deductible or need a service your insurance does not fully cover, we can help. The Blue Book will help you find fair prices for surgery, hospital stays, doctor visits, medical tests and much more.
Click here to get an abundance of excellent information on HSA's provided by the Department of the Treasury.
To establish your Health Savings Account, we highly recommend the HSA Bank(TM), a division of Webster Bank, N.A., which is a subsidiary of Webster Financial Corporation. They have maintained their ranking as the nation's largest administrator of HSA accounts in the industry. The Wisconsin-based company now manages nearly 29% of HSA deposits nationwide. To submit your HSA application to HSA Bank, click here.
To watch an excellent audio-vidio Overview of Health Savings Accounts created by HSA Bank, click here.
If you make consistent tax deductible deposits into an HSA account and small or no withdrawals from it, how much could you save in 10, 20 or 30 years? HSA BankTM) has provided you with an easy to use calculator to see.
Our agency has many years of experience establishing HSA accounts for individuals, families and businesses. Contact us to establish one for you. | 
