Health Savings Account FAQs
What is a health savings account (HSA)?
The HSA is an account that allows you to pay or be reimbursed for certain medical expenses. An HSA can only be used in conjunction with a high deductible health plan (HDHP). Money in the savings account helps pay the deductible and other qualified medical expenses for you, your spouse and dependents. Once the deductible is met, the insurance begins paying its share of eligible medical expenses.
Am I eligible to establish an HSA?
As a general guideline, you are eligible if you:
- Are covered under a high deductible health plan (HDHP);
- Are not covered (as an individual, spouse or dependent) by any other health plan that is not an HDHP;
- Are not enrolled in Medicare (generally, have not yet reached age 65); and
- May not be claimed as a dependent on another person’s tax return.
What constitutes a high deductible health plan (HDHP)?
For 2007 an HDHP has an annual individual deductible of at least $1,100 and annual out-of-pocket expenses (deductibles, copayments and other amounts, but not premiums) not exceeding $5,500. For family coverage, an HDHP has an annual deductible of at least $2,200 and annual out-of-pocket expenses not exceeding $11,000.
If a plan uses network providers, only deductibles and out-of-pocket expenses for in-network services are used to calculate the limit. Note: 2006 limits for individuals are: $1,050 deductible and $5,250 annual out of pocket; for families: $2,100 deductible and $10,500 annual out of pocket.
Who can contribute to an HSA?
An eligible individual, an employer, or both may contribute to an individual’s HSA in a given year. Others may contribute on a family member's behalf as long as the person who holds the account is an eligible individual.
How much can I contribute to my HSA?
Beginning in 2007, the limits are $2,850 for single coverage ($3,650 if you are age 55 or older) and $5,650 for family coverage ($6,450 if you are age 55 or older). The limit is no longer tied to the annual deductible. This maximum includes your contribution and your employer’s contribution (if any). So in calculating your maximum contribution, be sure to deduct your employer’s contribution first. Note: 2006 limits are $2,700 for individuals (($3,400 for age 55 and older), and $5,450 for families ($6,150 for age 55 or older).
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