Health Savings Accounts - HSA

Created in January 2004 as part of the Medicare prescription reform law, health savings accounts (HSAs) are sometimes referred to as medical IRAs. These plans are increasingly popular and, according to a May 2005 study by American Health Insurance Plans, more than one million people are now covered under HSA-based health plans. Many insurance companies, local banks, as well as specialized administrators offer HSAs, but be advised, the fees charged to run these plans vary
widely.

In 2008 an individual can contribute $2900 and for family the maximum is $5800-ragardless of the deductible of your health insurance plan.

Comparing HSAs, HRAs, and FSAs

Question	HSA	HRA	FSA
Do the funds belong to the employee?	YES	NO	YES
Can the money be invested and the employees earn interest?	YES	NO	NO
Can the employees use the funds for things other than medical expenses?	YES	NO	NO
Can the employee take the money with them if they switch employers?	YES	NO	NO
Do the funds rollover year-to-year?	YES	Generally, NO	NO
Who can contribute to the account?	Employers and/or Individuals	Employers	Employee

How does Health Savings Accounts work?

Like IRAs, individuals contribute pre-tax dollars into accounts that are tied to a wide range of investment vehicles (savings accounts, mutual funds or, in some cases, stocks). These accounts can accrue interest and roll over any unused balances to the next year, unlike standard Section 125 or “cafeteria” medical benefits plans. These funds can be withdrawn from the HSA at any time, without penalty, to pay for
legitimate medical expenses not typically covered by the insurer, such as office visit and prescription drug co-payments, vision expenses, and dental work.

An important note: HSAs can only be used in conjunction with health-insurance policies that have high “catasphrophic” annual deductibles—between $1,000 and $5,000 for individuals, or $2,000 and $10,000 for families—but these plans typically cover 100% of expenses once this limit has been met.

Get a HSA quote now!