Health Savings Accounts (HSA)
Q: What is an HSA?
A: A tax exempt trust or custodial account that allows a customer to pay for, or be reimbursed for qualified medical expenses.
Q: What is a High Deductible Health Plan?
A: HDHP’s are plans that have high deductibles but generally lower premiums.
Limits for 2007:
Single Coverage $1100.00 min. deductible
$5500.00 max out-of-pocket
Family Coverage $2200.00 min. deductible
$11,000.00 max out-of-pocket
Q: What are the benefits of an HSA?
A: Lower Health Ins. premiums
Tax-Free contributions to HSA
Interest earned is not taxed
Tax free withdrawals for qualified medical expenses
Q: Who is eligible?
A: Must have a HDHP
Must have no other health insurance coverage
Cannot be enrolled in Medicare
Cannot be claimed as a dependent on tax return
Q: Are there contribution limits?
A: 2007 Limits:
Single Coverage $2850.00
Family Coverage $5650.00
Catch up contribution (55 and older) $800.00
*Bank is only responsible for making sure no one deposits more than $6450.00
Q: How are withdrawals handled?
A: Tax free for qualified medical expenses.
Non qualified withdrawals are subject to tax and a 10% penalty.
Over age 65 can take with no penalty.
IRS Publication 502 lists qualified expenses.
Q: What happens to the HSA upon death?
A: If account is left to spouse, it can still be considered an HSA. If account if left to anyone else, it ceases to be an HSA.
*Important Note - This information is not intended to provide specific advice or recommendations for any individual. We recommend that you consult your attorney and tax or financial advisor with regards to your personal situation.