Consumers Guide to Health Savings Accounts

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Consumers Guide to Health Savings Accounts
Health SavingsAccount

• Presented By
• Gregory Mann
• Cor-Ben Consultants

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What is a HSA?
Health SavingsAccount

• A Health Savings Account consists of two parts

• Savings Account
• (Triple Tax Advantaged)
• Your money is not taxed going in
• Your money accrues interest tax-free
• Your money is not taxed coming out for Qualified
  Medical Expenses
• Your money rolls over year after year so you
  maintain control of your money.

HDHP (High Deductible
Health Plan) With a Deductible gt1100 for a
Single gt2200 for a Family
No Co-Pays or first dollar benefits allowed. All
Covered Expenses are credited to
Deductible. Carrier discounted negotiated rates
apply. Out Of Pocket maximums cannot exceed
limits.
Contributions are in addition to the HDHP
premiums. Employer and Employee may contribute
to the account. Yearly maximum contributions are
2900 5800. It is a Medical IRA, so at age 65
monies can be income.
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What is a High Deductible Health Plan?
Health SavingsAccount

• Health insurance plan with a minimum deductible
  (for 2008) of
• 1,100 (self-only coverage)
• 2,200 (family coverage)
• These amounts are indexed annually for inflation
• Annual out-of-pocket (for 2008) cannot exceed
• 5,600 (self-only coverage)
• 11,200 (family coverage)
• These amounts are indexed annually for inflation
• H.D.H.P.s can have
• First dollar coverage (no deductible) for
  preventative care (copays allowed)
• All covered benefits must apply to the plan
  deductible, including prescription drugs.

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Who is Eligible for H.S.A.s?
Health SavingsAccount

• Any individual that
• Is covered by a H.D.H.P.
• Is not covered by other health insurance
• Is not enrolled in Medicare
• Cant be claimed as a dependent on someone elses
  tax return

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H.S.A. Contribution Rules
Health SavingsAccount

• Maximum amount that can be contributed (and
  deducted) to an H.S.A. from all sources
• Maximum specified by law (indexed annually)
• 2,900 (self-only coverage) 2008
• 5,800 (family coverage) - 2008

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H.S.A. Contribution Rules
Health SavingsAccount

• Contribution to an H.S.A. can be made by the
  individual or the employer, or both.
• If made by the individual, it is an
  above-the-line deduction
• If made by the employer, it is not taxable to the
  employee (excluded from wage and income)

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H.S.A. Contribution Rules
Health SavingsAccount

• For individuals age 55 and older, additional
  catch-up contributions to the H.S.A. are
  allowed
• 2004 - 500
• 2005 - 600
• 2006 - 700
• 2007 - 800
• 2008 - 900
• 2009 and after - 1,000
• Contributions must stop once an individual is
  enrolled in Medicare.

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H.S.A. Distributions
Health SavingsAccount

• Distribution is tax-free if taken for qualified
  medical expenses.
• Now includes over-the-counter drugs
• Qualified medical expense must be incurred on or
  after the H.S.A. was established.
• Tax-free distributions can be taken for qualified
  medical expenses of
• Person covered by the high deductible
• Spouse of the individual (even if not covered by
  the H.D.H.P.)
• Any dependent of the individual (even if not
  covered by the H.D.H.P.)

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Qualified Medical Expenses
Health SavingsAccount
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H.S.A. Accounts
Health SavingsAccount

• No use it or lose it rules like Flexible
  Spending Accounts (F.S.A.s).
• All amounts in the H.S.A. are fully vested
• Unspent balances in accounts remain in the
  account until spent
• Encourages account holders to spend their funds
  more wisely on their medical care
• Encourages account holders to shop around for the
  best value for their health care dollars

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H.S.A. Accounts
Health SavingsAccount

• Accounts are owned by the individual (not an
  employer). The individual decides
• Whether he or she should contribute
• Which medical expenses to pay from the account
• Whether to pay for medical expenses from the
  account or save the account for future use
• Which financial institution will hold the account
• What type of investments to use for the account
  to grow

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Frequently Asked Questions
Health SavingsAccount

• 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 HDHP. For example, most
  health insurance does not cover the cost of
  over-the-counter medications but HSAs can. If
  the money from the HSA is used for qualified
  medical expenses, then the money is spent
  tax-free.
• What happens if I dont use the money in the HSA
  for medical expenses? If the money is used for
  other than qualified medical expenses, the
  expenditure will be taxed, and, for individuals
  who are not disabled or over age 65, subject to a
  10 tax penalty.

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FAQ
Health SavingsAccount

• Can I use the money in my HSA to pay for medical
  care for a family member? Yes, you may withdraw
  funds to pay for the qualified medical expenses
  of yourself, your spouse, or a dependent without
  tax penalty. This is one of the great advantages
  of HSAs.
• Can I use my HSA to pay for medical expenses
  incurred before I set up my account? No. You
  cannot reimburse qualified medical expenses
  incurred before your account is established.

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FAQ
Health SavingsAccount

• How do I use my HSA to pay my physician when Im
  at the physicians office? If you are still
  covered by your HDHP and have not met your policy
  deductible, you will be responsible for 100 of
  the amount agreed to be paid by your insurance
  policy to the physician. Your physician may ask
  you to pay for the services provided before you
  leave the office. If you HSA custodian has
  provided you with a checkbook or debit card, you
  can pay your physician directly from the account.
  If the custodian does not offer these features,
  you can pay the physician with your own money and
  reimburse yourself for the expense from the
  account after your visit.

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Thank you
Health SavingsAccount

• For more information please contact
• Gregg Mann (gmann_at_corbenconsultants.com)
• 614-326-7356
• or
• 800-589-1418