Health Savings Accounts (HSAs)

HSA Accounts were signed into Law on Dec. 8 th, 2004 as part of the Medicare Rx-Bill

What are the Contribution Rules and Tax Treatment of an HSA?  An HSA is generally exempt from tax (like an IRA or MSA) as long as a High Deductible Health Plan (HDHP) exists  Contributions may be made annually up to the lesser of HDHP deductible amount or $3050 single ($6150 Family)  HSA account is owned by the individual not the employer  Both the employer and employee may contribute to the deductible  Withdrawals may be made without tax consequences to pay for qualified medical expenses and in some instances for insurance premiums (COBRA & LTC)  Un-used account balances will carry over from year to year

Who is Eligible to Open an HSA?  Anyone who is covered under a qualified High Deductible Health Plan (HDHP)  Generally Anyone under the age of 65 (not Medicare eligible)  Cannot be claimed as a dependant on another persons tax return  Not covered by any other health plan  Injury or Illness Specific plans are allowed

Money Spent on Medical Care vs. Percentage of U.S. Population Money Spent on Medical Care Annually Percentage of US Population No Medical Expense33% $1 - $50040% $501 - $10009% $ $20007% $ $50005% $ $10,0003% $10,000 - $25, % $25,000 - $50, % $50,001 – And Up0.25%

What are the Elements of an HSA?  High Deductible Insurance (Established with the Insurance company)  Deductible Fund (Established at a Financial Institution)

What is Considered a High Deductible Health Plan?  Annual Deductible of at least $1200 for an individual and $2400 for a family  Annual out of pocket not in excess of $5950 for an individual and $11,900 for a Family  NO FIRST DOLLAR BENEFITS! – Deductible must apply to all benefits with the exception of preventative care

What are Some of the Expenses Covered Under an HSA?  Acupuncture  Alcoholism  Ambulance  Chiropractor  Home Care  Telephone  Wheelchair  Weight-Loss Program

What are Some of the Expenses Excluded From an HSA?  Baby Sitting  Controlled Substance  Cosmetic Surgery  Diaper Service  Hair Transplant  Drugs from other Countries  Nutritional Supplements  Funeral Expenses  Health Club  Hair Transplant  Teeth Whitening  Swimming Lessons  Veterinary Fees  Maternity Clothes

How will a HSA Work for Me?  There will be an Administrator for the account, usually a bank  Participants receive a Debit Card (Visa/MC Logo) with Deposit Slips  May have a Statement mailed monthly  Will have access to a tax deferred savings account that will receive a yield or interest tax deferred  May take money out of fund with no penalty at age 65

What are the Advantages of Having a HSA? For the Insured/Owner  Tax Deductible  Tax Deferred  Forced Accumulated Savings for Retirement  No co-payments once total deductible and OOP Max is met in savings account  Insured better manages his/her trips to a physician

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