VIEWS: 19 PAGES: 2 POSTED ON: 2/21/2010
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 www.treas.gov (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 http://www.treas.gov/offices/public-affairs/hsa/. 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 return. 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 (1/08) 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.
Pages to are hidden for
"HSA-Tri-fold-english-07"Please download to view full document