Facts About Health Savings Accounts
A Health Savings Account is an alternative to traditional health insurance. It is a savings product that allows consumers to pay for their health care in a different way. HSA's enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
In order to have a health savings account you must have a high deductible health plan (HDHP). Your health plan must meet the following requirements:
- Minium Deductible for 2008: $1100/ individual and $2200/ family
- Minimum Deductible for 2009: $1150/individual and $2300/family
- The Out-Of-Pocket Maximum for 2008: $5600/individual and $11,200/ family
- The Out-Of-Pocket Maximum for 2009: $5800/individual and $11,600/family
- No Copays
Along with this qualified health plan you can partner a Health Savings Account (HSA). There are contribution limits listed below:
- Maximum HSA contributions for 2008: $2900/individual and $5800/family
- Maximum HSA contributions for 2008: $3000/individual and $5950/family
- For example if you are an individual with an $1100 deductible you can contribute up to $2900 in the first year.
There are many benefits to having a High Deductible Heatlth Plan (HDHP) and Health Savings Account (HSA)
- The money you save in your HSA will carry over from year to year, you are not required to spend the savings by the end of the year
- For 2008, there is a $900 "Catch Up Limit" amount for people over age 55
- For 2009, there is a $1000 "Catch Up Limit" amount for people over age 55
- You can contribute in a lump sum or in any amounts or frequency. (Your account trustee/custodian (bank, credit union etc.) can impose minimum deposit and balance requirements.)
- You can use the money in your HSA to pay for qualified medical expenses. You can find this comprehensive list at www.irs.gov
- HSA funds can pay for "qualified medical expenses", even if the expense is not covered by your HDHP. For example, most health insurance does not cover the cost of over-the-counter medicines, but HSAs can. If the money is used for qualified medical expenses, then the money spent is tax-free.
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