More Than Just Health Savings Accounts
With Clarion Care employees are are assisted in managing their own care,
and suggest you NEED to know about Health Savings Accounts

What you SHOULD know about Health Savings Accounts

Other things you should know about a Health Savings Account

What is a Health Savings Account

An HSA is a tax-advantaged medical savings account available to individuals or families who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit, and the funds roll over and accumulate year over year if not spent.
HSAs are owned by the individual and funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses incur penalties if taken earlier.

HSA Contributions

HSA contributions can come from any source. Contributions are a tax deductible expense and do not generate any taxable income. Below are the upper contribution limits for 2010

Max Contribution 2010

Individual
$3,050

Family
$6,150

Contributions can be made at any time for any amount as long as the total contributions for the year do not go above the stated maximum contributions limits. The deadline for making tax deductible contributions on or before that years tax filing date. ie: 2010 contributions must be made on or before April 15th 2011

Who is eligible

Almost everyone is eligible for an HSA/HD plan. The three qualifiers for an HSA are that you
a.) Are covered by a high deductible health plan (shop for one here)
b.) You are not enrolled in Medicare Part A or B
c.) You are not listed as a dependent on another persons income tax return

What are HSA Qualified Medical Expense

As the owner of your HSA it is up to you to determine what qualified medical expenses are eligible for tax free distribution from your HSA. Clarion Care will help you track your medical expenses. Follow this link for a listing of what the IRS consider HSA qualified medical expenses, or here for the entire publication of IRS guideline 509.

HSA Max out of pocket expense

Health Savings Accounts have a federally mandated cap to expenses, or what is called a maximum out of pocket limit. Each plan is different, but the idea is that your High Deductible Health Insurance has a cap on how much money you can spend on one year in health care expenditures. For 2009 an individual out of pocket cap is $5,800 and $11,600 for a family, although the vast majority of plans will have a much lower cap.

The difference between and FSA and an HSA

Health Savings Accounts have a federally mandated cap to expenses, or what is called a maximum out of pocket limit. Each plan is different, but the idea is that your High Deductible Health Insurance has a cap on how much money you can spend on one year in health care expenditures. For 2009 an individual out of pocket cap is $5,800 and $11,600 for a family, although the vast majority of plans will have a much lower cap.

Who decides whether the money I'm spending from my HSA is for a 'qualified medical expense?'
You are responsible for that decision, and therefore should familiarize yourself with what qualified medical expenses are (as partially defined in IRS Publication 502). You should also keep your receipts (in your Clarion Care account) in case you need to defend your expenditures, or decisions during an audit.

Can I get an HSA even if I have other insurance that pays medical bills?
You may purchase auto, dental, vision long term care and disability insurance while being covered by an HDHP policy and still be eligible to open up a health savings account

I am over 55 can I make catch up contributions?

If you are 55 or older you may contribute an extra $1,000 dollars a year over the standard Health Savings Account contribution limits tax free into your Health Savings Account.

What happens to the money in a Health Savings Account after you turn age 65?
Once you turn 65 you may continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. You may though use your HAS to purchase Medicare supplemental insurance.

You may also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to the 10% penalty that applies to those under 65.

May a Husband and Wife have a joint HSA account?

Health Savings Accounts have a federally mandated cap to expenses, or what is called a maximum out of pocket limit. Each plan is different, but the idea is that your High Deductible Health Insurance has a cap on how much money you can spend in one year for health care expenditures. For 2009 an individual out of pocket cap is $5,800 and $11,600 for a family, although the vast majority of plans will have a much lower cap.

Do I have to start an HSA for my child?

No. Separate accounts for dependent children are not allowed

Can I use the money in my HSA to pay for medical care for a family member?

Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty. This is one of the great advantages of HSAs.

Investment earnings accrue tax-free.

HSA distributions are tax-free if used to pay for qualified medical expenses. Once the account holder reaches the age of 65 or older they may remove money from their Health Savings Account without penalty, but must pay income tax on the withdrawals.

What happens to the money in my HSA when I die?
What happens depends on how the HSA is designed. If your spouse is designated as the beneficiary by you, your spouse becomes the owner of the HSA when you die. If you provide that it goes to your estate or other entity, the value of the HSA at death is income to the estate or other entity.

Will my bank notify me if I've exceeded my allowable contribution amount?
No, it is your sole responsibility to keep track of the amounts deposited and spent from your account, just like a normal savings or checking account.

I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for medical expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

Do my HSA contributions have to be made in equal amounts each month?
No. Health Savings Account contributions can be made in one lump sum, or throughout the year in any denomination that you wish.

Can I use my HSA to pay for medical serviced provided in other countries?
Yes.

What is the tax treatment of contributions and investment earnings?

Individual contributions
Contributions made by an individual are deductible for federal income tax purposes, even if the account beneficiary does not itemize.
Employee Contributions
Employees' contributions to an HSA are considered wages, and therefore are subject to FICA taxes. Self-employed individuals are not subject to FICA taxes, but pay self-employment tax instead. An HSA contribution does not reduce self-employment tax.
Employer Contributions
Employer contributions are made on a pre-tax basis and are not subject to employment taxes (e.g. FICA).