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Health
Savings
Account
Consumers Guide to
Health Savings Accounts
Presented By:
Gregory Mann
Cor-Ben Consultants
1
Health
Savings What is a HSA?
Account A Health Savings Account consists of two parts:
HDHP + Savings Account
(Triple Tax Advantaged)
(High Deductible Health Plan)
1. Your money is not taxed going in
With a Deductible
2. Your money accrues interest tax-free
>$1100 for a Single
3. Your money is not taxed coming out for
>$2200 for a Family
Qualified Medical Expenses
4. Your money rolls over year after year
so you maintain control of your money.
No Co-Pays or first dollar benefits Contributions are in addition to the HDHP
allowed. premiums.
All Covered Expenses are credited to Employer and Employee may contribute to the
Deductible. account.
Carrier discounted negotiated rates apply. Yearly maximum contributions are $2900 &
$5800.
Out Of Pocket maximums cannot exceed
limits. It is a Medical IRA, so at age 65 monies can
be income.
2
Health
Savings What is a High Deductible Health Plan?
Account Health insurance plan with a minimum deductible
(for 2008) of:
$1,100 (self-only coverage)
$2,200 (family coverage)
These amounts are indexed annually for inflation
Annual out-of-pocket (for 2008) cannot exceed:
$5,600 (self-only coverage)
$11,200 (family coverage)
These amounts are indexed annually for inflation
H.D.H.P.’s can have:
First dollar coverage (no deductible) for
preventative care (copays allowed)
All covered benefits must apply to the plan
deductible, including prescription drugs.
3
Health
Savings Who is Eligible for H.S.A.’s?
Account
Any individual that:
Is covered by a H.D.H.P.
Is not covered by other health
insurance
Is not enrolled in Medicare
Can’t be claimed as a dependent
on someone else’s tax return
4
Health
Savings H.S.A. Contribution Rules
Account
Maximum amount that can be
contributed (and deducted) to an H.S.A.
from all sources =
Maximum specified by law (indexed
annually)
$2,900 (self-only coverage) – 2008
$5,800 (family coverage) - 2008
5
Health
Savings H.S.A. Contribution Rules
Account
Contribution to an H.S.A. can be
made by the individual or the
employer, or both.
If made by the individual, it is
an “above-the-line” deduction
If made by the employer, it is
not taxable to the employee
(excluded from wage and
income)
6
Health
Savings H.S.A. Contribution Rules
Account
For individuals age 55 and older,
additional “catch-up” contributions to
the H.S.A. are allowed:
2004 - $500
2005 - $600
2006 - $700
2007 - $800
2008 - $900
2009 and after - $1,000
Contributions must stop once an
individual is enrolled in Medicare.
7
Health
Savings H.S.A. Distributions
Account Distribution is tax-free if taken for “qualified
medical expenses”.
Now includes “over-the-counter drugs”
Qualified medical expense must be incurred on
or after the H.S.A. was established.
Tax-free distributions can be taken for qualified
medical expenses of:
Person covered by the high deductible
Spouse of the individual (even if not
covered by the H.D.H.P.)
Any dependent of the individual (even if not
covered by the H.D.H.P.)
8
Health
Qualified Medical Expenses
Acupuncture Non-Prescription Medications (Over The Counter)
Savings Alcoholism Treatment
Ambulance
Nursing Home
Nursing Services (Including Board & Meals)
Account Artificial Limbs or Prostheses
Birth Control Pills (By Prescription
Ophthalmologist
Optician
Braces Optometrist
Car-Special Hand Controls or Equipment to Aid a Disabled Person Organ Transplant (Including Donor Expense)
Chiropractor Osteopath
Christian Science Practitioner Oxygen and Oxygen Equipment
Contact Lenses & Cleaning Solutions Physician Services
Crutches Podiatrist
Dentures Prescription Medications
Dermatologist Psychiatrist
Drug Addiction Treatment Special Home for the Mentally Retarded
Eyeglasses Special School Costs for the Handicapped
Fertility Treatment Specialist Services
Guide Dog or Assistance Animal Sterilization
Hearing Aids & Batteries Stop Smoking Programs (Physician Prescribed)
Home Improvements to Accommodate a Disabled Person Telephone or TV Equipment to Assist the Hearing Impaired
Hospital Services Transportation Expenses (Relative to Health Care
Lab Fees Vasectomy
Laser Eye Surgery Weight Loss Programs to Treat an Existing Disease
Lead Paint Removal Wheelchair
Lodging (Away from Home for Prescribed Outpatient Care) X-Rays
Long Term Care (Certain Limits Apply)
9
Health
Savings H.S.A. Accounts
Account
No “use it or lose it rules” like Flexible
Spending Accounts (F.S.A.’s).
All amounts in the H.S.A. are fully vested
Unspent balances in accounts remain in the
account until spent
Encourages account holders to spend their
funds more wisely on their medical care
Encourages account holders to shop around
for the best value for their health care
dollars
10
Health
Savings H.S.A. Accounts
Account
Accounts are owned by the individual (not
an employer). The individual decides:
Whether he or she should contribute
Which medical expenses to pay from
the account
Whether to pay for medical expenses
from the account or save the account
for future use
Which financial institution will hold the
account
What type of investments to use for the
account to grow 11
Health
Savings Frequently Asked Questions
Account Does an HSA pay for the same things that
regular insurance pays for? HSA funds can
pay for any “qualified medical expense” even if
the expense is not covered by your HDHP. For
example, most health insurance does not cover
the cost of over-the-counter medications but
HSA’s can. If the money from the HSA is used
for qualified medical expenses, then the money
is spent tax-free.
What happens if I don’t use the money in the
HSA for medical expenses? If the money is
used for other than qualified medical expenses,
the expenditure will be taxed, and, for
individuals who are not disabled or over age 65,
subject to a 10% tax penalty.
12
Health
Savings FAQ
Account
Can I use the money in my HSA to pay for
medical care for a family member? Yes,
you may withdraw funds to pay for the
qualified medical expenses of yourself, your
spouse, or a dependent without tax
penalty. This is one of the great
advantages of HSA’s.
Can I use my HSA to pay for medical
expenses incurred before I set up my
account? No. You cannot reimburse
qualified medical expenses incurred before
your account is established.
13
Health
Savings FAQ
Account How do I use my HSA to pay my physician
when I’m at the physician’s office? If you
are still covered by your HDHP and have not
met your policy deductible, you will be
responsible for 100% of the amount agreed to
be paid by your insurance policy to the
physician. Your physician may ask you to pay
for the services provided before you leave the
office. If you HSA custodian has provided you
with a checkbook or debit card, you can pay
your physician directly from the account. If the
custodian does not offer these features, you can
pay the physician with your own money and
reimburse yourself for the expense from the
account after your visit.
14
Health
Savings Thank you
Account
For more information please contact
Gregg Mann (gmann@corbenconsultants.com)
614-326-7356
or
800-589-1418
15
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