What is a Health Savings Account ("HSA")?
A Health Savings Account allows individuals to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax free basis.
Who is eligible for a Health Savings Account?
To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance (does not apply to specific injury insurance and accident, disability, dental care, vision care, long-term care), is not eligible for Medicare, and can't be claimed as a dependent on someone else's tax return.
What is a "High Deductible Health Plan" (HDHP)?
A HDHP is a health insurance plan with minimum deductible of $1,100 (self-only coverage) or $2,200 (family coverage). The annual out-of-pocket (including deductibles and co-pays) cannot exceed $5,500 (self-only coverage or $11,000 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and higher out-of-pocket (copays & coinsurance) for non-network services.
Who can contribute to a Health Savings Account?
Contributions to HSAs can be made by either the employer or the individual, or both. If contributions are made by the individual, it is an "above-the-line" deduction. If contributions are made by the employer. It is not taxable to the employee (excluded from income).
How much can I contribute to a Health Savings Account?
The maximum contribution for 2010 is $3,050 for individuals and $6,150 for Family coverage. Individuals age 55 and older can also make an additional “catch-up” contribution for 2010 of $1,000. These dollar limits will be adjusted for inflation each year.
Do Health Savings Account funds roll over year after year and get invested?
Yes, the money is invested in a Health Savings Account rolls over year after year.
