Personal AccountsHealth Savings Account
A Health Savings Account (HSA) is a tax-advantaged account that can be established by eligible individuals covered under a high-deductible health plan to save and pay for qualified medical expenses. Examples of qualified expenses include co-pays, hospital visits, prescriptions and certain non-prescription drugs, and some insurance premiums such as Long Term Care insurance.
Contributions made on your behalf are fully tax-deductible, earnings are tax-deferred and distributions used to pay for qualified medical expenses are tax-free, regardless of your income.*
A key benefit of a Health Savings Account is that the contributions you make belong to you with no spending deadline. All unused contributions stay in your account, earning tax-deferred interest.
Features of the Health Savings:
- $30 annual fee
- $100 minimum deposit to open the account
- Free Visa Check Card and unlimited check writing
- Free Online Banking for viewing your account information
*Consult your tax advisor regarding the tax advantages of a health savings account.
What is an HSA?
An HSA is money put in a special account owned by an individual to pay current and future medical expenses.
Who is eligible for an HSA?
An eligible individual is someone who is:
- Covered by a High Deductible Health Plan (HDHP).
- Generally not covered by any health plan that is not a HDHP.
- Not enrolled in Medicare.
- Not eligible to be claimed as a dependent on another person’s income tax return.
Definition of High Deductible Health Plans
A health plan is a high deductible health plan (HDHP) if the plan satisfies both an annual deductible and an out-of-pocket expense requirement.
Year | Coverage | Minimum Annual Deductible | Maximum Out-of-Pocket Expenses |
2008 | Self | $1,100 | $5,600 |
Family | $2,200 | $11,200 | |
2009 | Self | $1,150 | $5,800 |
Family | $2,300 | $11,600 |
HSA Contribution Limits:
Year | Self | Family | Catch-up (age 55+) |
2008 | $2,900 | $5,800 | $900 |
2009 | $3.000 | $5,950 | $1,000 |
Contributions may be made by:
- The individual
- The employer
- By others on behalf of the individual
HSA Distributions
Qualified Medical Expenses are medical expenses that are:
- Incurred on behalf of the HSA owner, spouse or dependents.
- Incurred after an HSA has been established.
- Not covered by insurance.
- Paid by the HSA owner, spouse or dependent.
If a distribution is not used for Qualified Medical Expenses:
- The distribution amount will be included in income.
- A 10% penalty will be assessed; this penalty will be waived upon death, disability or attaining age 65.
* Consult your tax advisor regarding the tax advantages of a Health Savings Account.
