HSA Fast Facts

Many people are still unsure of how HSAs work. Following are some "Fast Facts." For more detailed information, we recommend your reading the information provided in the HSA Library from the US Treasury Department and from the HSA Coalition.

Congress introduced Health Savings Accounts (HSAs) on January 1, 2004 as part of the Medicare Reform Act. These "medical IRAs" when paired with a qualified High-Deductible Health Plan (HDHP) cover eligible medial expenses not covered by the health plan.
An HDHP satisfies certain requirements with respect to deductibles and out-of-pocket expenses. A qualified HDHP must have:
1. an annual deductible of at least $1,000 and annual out-of-pocket maximum not exceeding $5,000 for individuals
2. OR an annual deductible of at least $2,000 and an annual out-of-pocket maximum not exceeding $10,000 for families.
No amounts are payable from an HDHP until the individual or family has incurred covered medical expenses in excess of the minimum annual deductible. The money to pay expenses up to the annual deductible may be withdrawn from an HSA allowing medical expenses to be paid on a pre-tax basis.
An individual is NOT eligible for an HSA if he or she is also covered by another health plan (individual, spouse, or dependent) that is not an HDHP.
If you enroll in an HSA-eligible health plan in the middle of the calendar year, your maximum contribution will be prorated based on the number of months you have the HSA-eligible health plan. For example, if your individual plan’s annual deductible is $2400 and you enroll in the HSA-eligible plan mid-year, then your maximum contribution for the first year can be up to $1200. If you are enrolled for all twelve months, then you may contribute the full amount of the deductible.
HSA funds can grow tax-deferred in a variety of investment vehicles: Passbook savings, mutual funds, or stocks.
You may take withdrawals for qualified medical expenses and pay for them on a tax free basis. Any withdrawals taken for non-qualified medical expenses are subject to penalties, and taxes.
HSAs belong to individuals, not to companies, and therefore the accounts are portable (like a 401(k) plan).

Please contact us for more information.