|
Here's What's Cool About an HSA:
Protect
yourself
from big health stuff.
Protect your
money
from taxes.
What is a Health Savings
Account?
A Health Savings Account (HSA) is a
health insurance program that combines traditional health insurance with
an IRA-like savings plan.
|
HSA
EXAMPLE: Sarah: Age 35 |
|
Annual HSA Contribution |
$2,850 |
|
Income Tax Bracket |
25% |
|
Annual Income Tax Savings |
$712.50 |
|
Annual Health Insurance Savings |
$600.00 |
|
% of
contribution and HSA spending that is tax and income
savings |
46% |
|
HSA
Interest Rate* |
5% |
|
Account Balance: Age 65** |
$257,412.88 |
*Rates can be
higher or lower
**No withdrawals
for medical expenses
Your
HSA, combined with a required high deductible health plan,
provides you with the security of insurance coverage for major health
costs and a tax-free savings plan for minor health expenses or
retirement. Like an IRA, an HSA enables you to invest tax-free
contributions in high interest savings accounts, mutual funds and
brokerage accounts.
Best of all, your HSA
funds remain tax-free when used on qualifying out-of-pocket health
expenses. These include your health insurance deductibles and many
health expenses not covered by your plan - including vision, dental and
even over-the-counter drugs like aspirin. And since you’re spending
money that wasn’t taxed, it’s like getting a savings discount every time
you use it!
When you add in the money you can save on
premiums from a higher deductible health plan, you’ll see why HSA’s
are quickly becoming a popular health insurance choice for groups,
individuals and families. This is especially true for those in
relatively good health who are paying high insurance rates for coverage
they simply don’t use or need.
Access to Your Money is Fast and Easy.
You can quickly and easily use your funds
at any time and without penalty for any qualifying health expense. In
fact, most HSA providers issue debit cards linked directly
to your Health Savings Account for easy access whenever you need
it. All decisions on when and how to spend your money are made by you
without relying on a third party or a health insurer. You have total
control.
And
HSA’s have fewer restrictions than most insurance plans, so
you can use it for
yourself, your spouse, or your dependent children - even if they’re
not covered by your health plan! However, any funds used for
purposes other than “qualified medical expenses” are taxable as income
and subject to an additional 10% tax penalty.
After you turn
age 65, become disabled and/or enroll in Medicare, the account can be
used for other purposes without paying the additional 10% penalty.
HSA High Deductible
Health Plans
The key to opening and saving with an
HSA is coverage by an approved high deductible health plan. For
2007, your qualifying health plan’s minimum deductible must be at least
$1,100 (individual) or $2,200 (family).
High deductible plans
generally cost less than traditional health care coverage,
so the money you save on rates (plus the tax savings) help quickly fund
your Health Savings Account.
There are
many companies and plans that qualify an HSA. With a simple phone
call, All Cities Health Insurance Services will help you
select the right qualifying plan based on your budget, goals and needs.
How Do I Enroll?
When
All Cities Health Insurance Services helps you select a
high-deductible health plan and ensures your eligibility, we also help
you select an HSA administrator for your account and discuss the
pros and cons of different offerings. You can change administrators and
health plans at any time with no penalty, but All Cities Health
Insurance Services will help you set up your account correctly the first
time so there are no surprises or mistakes.
Simply
call 800-443-9109
or
email me for more information. I'd be happy to help you decide if an
HSA is right for you!
FREQUENTLY ASKED
QUESTIONS
How
Much Can I Contribute?
You can make a contribution to your HSA
each year you remain eligible with a qualifying individual health plan.
For 2007, you can contribute up to $2,850 for individuals and up to
$5,650 for families.
How
often do I make HSA contributions?
You can contribute in a lump sum or in any amounts or frequency you
wish.
How
can I get an HSA?
You can find out if an HSA is right for you with a simple phone call to
All Cities Health Insurance Services.
How
much does an HSA cost?
There is no cost to start an HSA, although some financial institutions
may charge an application fee to set up your savings account. The only
purchase required is a High Deductible Health Plan.
I
don’t have a job, can I have an HSA?
Yes, if you meet all other eligibility requirements. Contributions can
be from a relative, your savings, unemployment or welfare benefits, etc.
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 health plan. For example, most health
plans do not cover the cost of over-the-counter medicines, but HSA’s
can. If the HSA is used for qualified medical expenses, it remains
tax-free.
What
are Qualified Medical Expenses?
A determination of whether an expense is for "medical care" is based on
all the relevant facts and circumstances. To be an expense for medical
care, the expense has to be primarily for the prevention or
alleviation of a physical or mental defect or illness. The determination
often hangs on the word "primarily."
Who
decides whether my HSA was used for a “qualified medical expense?”
You are responsible for that decision, and therefore should familiarize
yourself with what qualified medical expenses are (as partially defined
in IRS Publication 502) and also keep your receipts in case you need to
defend your expenditures or decisions during an audit. |
