What are Health Savings Accounts (HSAs)?

September 20, 2009 by admin

A Health Savings Account (HSA) is an account that you can deposit money into for current and future qualified medical expenses for you and your family on a tax-free basis. This includes most medical care, including dental and vision care, long-term care expenses, and insurance. The program is voluntary. There is a maximum amount of money you can deposit into your HSA yearly. This amount is determined by the Internal Revenue Service (IRS). You are eligible to open an HSA account if:

• You have coverage under a High Deductible Health Plan (HDHP).
• You are not enrolled in Medicare.
• You are not considered a dependent on someone else's tax return.

If you are eligible, you can sign up for an HSA with banks, credit unions, insurance companies, and other financial institutions. Your employer may also set up a plan for employees as well. If you had an HSA before enrolling in Medicare, you can keep your account. You cannot continue to contribute to your HSA after enrolling in Medicare. When you enroll in Medicare, you can keep the money in your account and use it to pay for medical expenses, including your Medicare premiums (except Medigap premiums) and out-of-pocket expenses, such as deductibles, copays, and coinsurance under any part of Medicare. You own your HSA account and take it with you if you leave your health plan or job. Your contributions go with you. If your plan was fully funded, there may be additional restrictions or penalties. Contact your plan for more information. If you have additional questions regarding HSAs, please visit the Department of the Treasury HSA page. You can also call the IRS toll-free assistance line at 1-800-829-1040.