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									               Advantages of HSAs                                  What Happens to My HSA When I Die?
Security – Your high deductible insurance and HSA                If your spouse becomes the owner of the account, your
protect you against high or unexpected medical bills.            spouse can use it as if it were their own HSA. If you
                                                                 are not married, the account will no longer be treated as
Affordability – You should be able to lower your                 an HSA upon your death. The account will pass to your
health insurance premiums by switching to health                 beneficiary or become part of your estate (and be
insurance coverage with a higher deductible.                     subject to any applicable taxes).

Flexibility – You can use the funds in your account to              Opening Your Health Savings Account
pay for current medical expenses, including expenses
that your insurance may not cover, or save the money in          Banks, credit unions, insurance companies and other
your account for future needs, such as:                          financial institutions are permitted to be trustees or
• Health insurance or medical expenses if unemployed             custodians of these accounts. Other financial
• Medical expenses after retirement (before Medicare)            institutions that handle IRAs or Archer MSAs are also
• Out-of-pocket expenses when covered by Medicare                automatically qualified to establish HSAs
                                                                                                                                    Health Savings Accounts
• Long-term care expenses and insurance
                                                                     Need More Information about HSAs?                       A Health Savings Account (HSA) is an account that
Savings – You can save the money in your account for                                                                         you can put money into to save for future medical
future medical expenses and grow your account through            Treasury’s web site has additional information about        expenses. There are certain advantages to putting
investment earnings.                                             Health Savings Accounts, including answers to               money into these accounts, including favorable tax
                                                                 frequently asked questions, related IRS forms and           treatment. HSAs were signed into law by President
Control – You make all the decisions about:                      publications, technical guidance, and links to other        Bush on December 8, 2003.
• How much money to put into the account                         helpful web sites. Treasury’s HSA website can be
• Whether to save the account for future expenses or             found through (click on “Health Savings                    Who Can Have an HSA
pay current medical expenses                                     Accounts”) or directly at the following address:
• Which medical expenses to pay from the account                  Any adult can contribute to an HSA if they:
• Which company will hold the account                                                                                        • Have coverage under an HSA-qualified “high
• Whether to invest any of the money in the account                                                                          deductible health plan” (HDHP)
• Which investments to make                                                                                                  • Have no other first-dollar medical coverage (other
                                                                                                                             types of insurance like specific injury insurance or
Portability – Accounts are completely portable,                                                                              accident, disability, dental care, vision care, or long-
meaning you can keep your HSA even if you:                                                                                   term care insurance are permitted).
• Change jobs                                                                                                                • Are not enrolled in Medicare.
• Change your medical coverage                                                                                               • Cannot be claimed as a dependent on someone else’s
• Become unemployed                                                                                                          tax return.
• Move to another state
• Change your marital status                                                                                                 Contributions to your HSA can be made by you, your
                                                                                                                             employer, or both. However, the total contributions are
Ownership – Funds remain in the account from year to                                                                         limited annually. If you make a contribution, you can
year, just like an IRA. There are no “use it or lose it” rules                                                               deduct the contributions (even if you do not itemize
for HSAs.                                                                                                                    deductions) when completing your federal income tax
Tax Savings – An HSA provides you triple tax savings:
(1) tax deductions when you contribute to your account;                                                                      Contributions to the account must stop once you are
(2) tax-free earnings through investment; and,                                                                               enrolled in Medicare. However, you can keep the
(3) tax-free withdrawals for qualified medical expenses.                                                                     money in your account and use it pay for medical
                                                                                                                             expenses tax-free.
  High Deductible Health Plans (HDHPs)                                   Catch-Up Contributions                                           Using Your HSA
You must have coverage under an HSA-qualified “high          Individuals age 55 and older can also make additional       You can use the money in the account to pay for any
deductible health plan” (HDHP) to open and contribute        “catch-up” contributions. The maximum annual catch-         “qualified medical expense” permitted under federal tax
to an HSA. Generally, this is health insurance that does     up contribution is as follows:                              law. This includes most medical care and services, and
not cover first dollar medical expenses. Federal law                                                                     dental and vision care, and also includes over-the-
requires that the health insurance deductible be at least:            2008 - $900                                        counter drugs such as aspirin.
                                                                      2009 and after - $1,000
         $1,100* -- Self-only coverage                                                                                   You can generally not use the money to pay for medical
         $2,200* -- Family coverage                                 Determining Your Contribution                        insurance premiums, except under specific
                                                                                                                         circumstances, including:
In addition, annual out-of-pocket expenses under the         Your eligibility to contribute to an HSA for each month     • Any health plan coverage while receiving federal or
plan (including deductibles, co-pays, and co-insurance)      is generally determined by the whether you have HDHP        state unemployment benefits.
cannot exceed:                                               coverage on the first day of the month. Your maximum        • COBRA continuation coverage after leaving
                                                             contribution for the year is the greater of: (1) the full   employment with a company that offers health
          $5,600* -- Self-only coverage                      contribution, or (2) the pro rated amount. The full         insurance coverage.
         $11,200* -- Family coverage                         contribution is the maximum annual contribution for the     • Qualified long-term care insurance.
                                                             type of coverage you have on December 1. The pro            • Medicare premiums and out-of-pocket expenses,
In general, the deductible must apply to all medical         rated amount is 1/12 of the maximum annual                  including deductibles, co-pays, and coinsurance for:
expenses (including prescriptions) covered by the plan.      contribution for the type of HDHP coverage you have                  Part A (hospital and inpatient services)
However, plans can pay for “preventive care” services        times the number of months you have that type of                     Part B (physician and outpatient services)
on a first-dollar basis (with or without a co-pay).          coverage. If your contribution is greater than the pro               Part C (Medicare HMO and PPO plans)
"Preventive care" can include routine pre-natal and          rated amount, and you fail to remain covered by an                   Part D (prescription drugs)
well-child care, child and adult immunizations, annual       HDHP for the entire following year, the extra
physicals, mammograms, pap smears, etc.                      contribution above the pro rated amount is included in      You can use the money in the account to pay for
                                                             income and subject to an additional 10 percent tax.         medical expenses of yourself, your spouse, or your
            Finding HDHP Coverage                                                                                        dependent children. You can pay for expenses of your
                                                             Examples: If you first have family HDHP coverage on         spouse and dependent children even if they are not
Any company that sells health insurance coverage in          July 1, 2008, and keep HDHP coverage through                covered by your HDHP.
your state may offer HDHP policies. Although                 December 31, 2008, you are allowed the full $5,800
Treasury cannot recommend any specific names of              family contribution to an HSA for 2008. If you fail to      Any amounts used for purposes other than to pay for
companies selling these policies, you should be able to      remain covered by an HDHP for all of 2009, $2,900           “qualified medical expenses” are taxable as income and
find a qualified policy by contacting your current           would be included income and subject to an additional       subject to an additional 10% tax penalty. Examples
insurance company, an agent or broker licensed to sell       10 percent tax.                                             include:
health insurance in your state, or your state insurance                                                                  • Medical expenses that are not considered “qualified
department.                                                  If you have family HDHP coverage from January 1,            medical expenses” under federal tax law (e.g., cosmetic
                                                             2008 until June 30, 2008, then cease having HDHP            surgery).
                HSA Contributions                            coverage, you are allowed an HSA contribution of 6/12       • Other types of health insurance unless specifically
                                                             of $5,800, or $2,900 for 2008.                              described above.
You can make a contribution to your HSA each year                                                                        • Medicare supplement insurance premiums.
that you are eligible. For 2008, you can contribute up       If you have family HDHP coverage from January 1             • Expenses that are not medical or health-related.
to $2,900* if you have Self-only coverage and $5,800*        2008 until June 30, 2008, and have self-only HDHP
if you have Family coverage                                  coverage from July 1, 2008 to December 31, 2008, you        After you turn age 65, the 10% additional tax penalty
 ________________________                                    are allowed an HSA contribution of 6/12 x $5,800 plus       no longer applies. If you become disabled and/or enroll
*2008 amounts; adjusted annually for inflation.              6/12 of $2,900, or $4,350 for 2008.                         in Medicare, the account can be used for other purposes
                                                                                                                         without paying the additional 10% penalty.
                                                             Contributions can be made as late as April 15 of the
                                                             following year.

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