|
 What
is a Health Savings Account?
Do
I still need medical insurance?
For
the purpose of HSAs, what is a high deductible plan?
What
happens to the money in the HSA Account?
Can
I withdraw funds from the HSA for non-medical expenses?
How
much money will this save me on taxes? Is an HSA preferable
to just deducting medical expenses on my income tax?
When
can I start depositing money into an HSA account?
Can
I make a lump sum Deposit at the beginning of the year?
Are
there administration fees?
Does
the account pay interest?
How
will my HSA account pay claims?
What is a Health
Savings Account?
A Health Savings Account, or HSA, is a savings
account which can be used to pay medical expenses not covered
by insurance. Contributions to the plan are deductible from
an accountholders’ federal income tax and, where permitted,
from state income tax. Individuals can accumulate funds in
the account from year to year.
Do I still
need medical insurance?
Yes. Under the legislation passed by Congress, the HSA must
be coupled with a high-deductible medical insurance plan.
Individuals pay small medical bills out of their own pocket
up to the deductible but have medical coverage in case of
serious illness or accident.
For the purpose
of HSAs, what is a high deductible plan?
$1,000 minimum deductible plan with a total out
of pocket maximum of $5,000 per individual and a deductibles
of a $2,000 whichever is less. For a family covered by an
individual plan, up to 100% of the family deductible per calendar
year or $5,150 whichever is less, can be contributed.
What happens
to the money in the HSA Account?
The money can be carried over for medical expenses
the following year, and you can continue contributing up to
the maximum deposit each year. HSA funds can be used to pay
post-retirement healthcare expenses not covered by Employers
or by Medicare, or to purchase long-term care insurance.
Can I withdraw
funds from the HSA for non-medical expenses?
If you want to withdraw funds for another purpose
prior to age 65, a 10% penalty will apply in addition to income
tax. After you turn 65 or become eligible for Medicare, there
is no penalty for withdrawal; however, ordinary income tax
must be paid.
How much money
will this save me on taxes?
Is an HSA preferable to just deducting medical expenses on
my income tax?
Most individuals save on taxes using HSA’s
because of the IRS limits on deducting medical expenses. How
much will depend on your income bracket, any state taxes in
your area, whether your state allows a deduction for HSA funds.
When can I
start depositing money into an HSA account?
Immediately after you start a qualified Major Medical
Plan.
Can I make a lump sum Deposit at the beginning
of the year?
You may make an annual lump sum Deposit, or if you
wish you can set up Deposits on a monthly basis.
Are there administration
fees?
This can vary from company to company.
Does the account
pay interest?
Some companies also offer accounts that pay interest.
This interest is normally tax deferred. Some companies allow
you to invest your HSA funds in Mutual Funds.
How will my
HSA account pay claims?
Some companies give you a debit card to pay your
claims with, others may combine the processing with insurance
claims processing. Some may require you to fill out claims
forms. Check the companies you are thinking of buying from
to see how they pay claims.
|
