Health Savings Accounts (HSAs)
What are Health Savings Accounts (HSAs)?
The Medicare Prescription Drug bill signed by President Bush in December 2003 authorizes the creation of tax-preferred Health Savings Accounts (HSAs) and is available to all workers covered by health insurance plans with deductibles of at least $1,000 for individuals and $2,000 for families.
How Can I Obtain a HSA?
A health insurance agent can help you determine if you qualify for an HSA, as well as work with you to set the account up. The agent can provide you with additional information on your options and offer advice on how to manage risks and make informed choices.
To contact an agent within your zip code who can help you learn more, use the AHIA Agent Locator. This service is free and offers basic contact information for agents within your area and lines of business the agent services. All advisors are licensed and regulated by their state insurance department.
Who Are Eligible for HSAs?
- Individuals with a high-deductible health plan
- Individuals not entitled to Medicare
- Individuals that may not be claimed as a dependent on another person's tax return
- Individuals that are not covered, in addition to the high-deductible plan, by any other health plan which is not a high-deductible plan and which provides coverage for benefits which are covered under the high-deductible plan.
What Are Contribution/Distribution Rules?
HSA contributions can be made by individuals, employers, or rollovers from Archer Medical Savings Accounts (MSAs). Individual contributions are deductible; employer contributions are tax-free to employees. The combination of contributions from employers and individuals cannot exceed the annual limits. Distributions are tax-free if used for qualified medical expenses; they are subject to a 10% penalty tax if made prior to disability or retirement (attaining age 65) for any other purpose.
