The basics of HSAs
What is a Health Savings Account?
A Health Savings Account (HSA) is a trust or custodial account created exclusively for the benefit of the account holder and is subject to rules similar to those that apply to individual retirement accounts (IRAs). An HSA also has the added benefit of allowing you to pay for qualified medical expenses out of your HSA on a pre-tax basis. What are the latest HSA limits?2008 HSA Limits High Deductible Health Plan (HDHP) Minimum Deductible
Single - $1,100
Family - $2,200 Contribution Maximum
Single - $2,900
Family - $5,800
Individuals age 55 or older can also make addition "catch up" contributions of up to $900. Maximum Out-Of-Pocket Expenses
Single - $5,600
Family - $11,200 What is a High Deductible Health Plan? Regulations for 2008:
An HDHP is an insurance plan that has a minimum deductible of $1,100 annually for individual coverage ($2,200 minimum for family coverage). Plans with co-pays are generally ineligible. Maximum annual out of pocket cannot exceed $5,600 for an individual or $11,200 for family. You will want to verify with your insurance provider and/or with your employer as to whether or not your insurance plan qualifies you to contribute to an HSA. How do I know if I am eligible to contribute to an HSA Account? You must be a participant in a High Deductible Health Plan (HDHP), regardless of whether or not the insurance is provided to you by you employer or if you purchased an individual insurance policy. In order to be eligible to contribute to an HSA, you cannot be covered by any other health plan that is not an HDHP (i.e. you cannot also be covered by your spouses insurance), you cannot be covered under Medicare, and you cannot be claimed as a dependent on another person's tax return. What happens to any balances in my HSA that I do not use by the end of the year?Unlike Flexible Spending Accounts that are “use it or lose it” unused contributions in you HSA will accumulate tax-free until retirement. How do I ensure I report my HSA expenses accurately? How do I ensure I report my HSA expenses accurately?
If audited, you will be asked to prove that your HSA dollars were used for qualified expenses. If you use your HSA dollars for non-qualified expenses, you will be subject to both penalties and taxes. Visit http://www.irs.gov/pub/irs-pdf/p502.pdf for a list of qualified expenses or sign up for The BASIC HSA Audit Protection Kit. Our kit will offer peace of mind when dealing with tax reporting. BASIC HSA Audit Protection Kit includes: - Scanning and storage of receipts
- Audit of receipts for IRS deductibility
- Certification of qualification o Procedures for reporting non-qualifying expenses
- Folder for receipt storage
- Business reply envelope for receipt mailing
All for only $60. Call 800-444-1922 ext 3 to sign up.
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