HSA 101- Learn about Health Savings Account

“HSA 101” Q & A Document Part I Questions and Answers on the Basics of an HSA Question: What is a Health Savings Account (HSA)? Answer: It is a tax-exempt trust or custodial account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary who, for the months for which contributions are made to an HSA, is covered under a qualified high deductible health plan (QHDHP). Question: What is a qualified medical expense? Answer: They are expenses paid by the account beneficiary, his or her spouse or dependents for medical care. Qualified medical expenses include prescription drugs. (See the listing on Section 213 (d) of the internal Revenue Code for more details) Question: Who is eligible for an HSA? Answer: Any individual who for a given month is covered under a QHDHP on the first day of such month, who is also not covered by any other health plan that is not a QHDHP, who is not entitled to benefits under Medicare, and who may not be claimed as a dependent on another person’s tax return. Question: What is a Qualified High Deductible Health Plan (QHDHP)? Answer: It is a health plan that satisfies certain requirements with respect to deductibles and out of pocket expenses. For 2009 a QHDHP HSA a minimum annual deductible of $1,150 and a maximum annual out of pocket expenses of $5,800. For family coverage the minimum annual deductible is $2,300 and the maximum annual out of pocket expenses is $11,600. Question: What applies to the out of pocket expenses on the QHDHP? Answer: Deductibles, Co-payments, and Coinsurance. Meridian Insurance Group, LLC. Charles G. Stout, RHU, LUTCF 301 Yamato Road • Suite 3150 • Boca Raton, FL 33431 • 561-994-2210 Ext. 17 1/08

Question: Can I rollover my IRA to my HSA? Answer: Yes but you cannot exceed the annual maximum contribution for that year into your HSA. Question: In what form can my contribution be made? Answer: Cash. Question: If I am an employer, can I contribute different amount to different classes of employees? Answer: Yes. You may make greater contributions outside of a Section 125 for non- highly compensated employees. Question: When can I contribute to my account? Answer: Contributions can be made at any time during the contribution year until the tax return due date of April 15th. Question: What is the maximum I can contribute to my HSA? Answer: For 2009, the limit is $3,000 for single coverage and $5,950 for family coverage. Amounts transferred from an IRA plus any additional employer contributions will be applied against the annual contribution limit. Question: Do I have to use a broker to set up my HSA? Answer: No. You may open an account with any financial institution which offers health savings accounts. Most health plans have partnered with a financial institution for ease of administration. Question: How do I withdraw funds to pay for my services if I have set up my account with a bank or other financial institution? Answer: Typically you can withdraw funds via debit card, checkbook, or withdrawal forms from your HSA. Question: How will my insurance carrier know my deductible HSA been met? Answer: You will need to save your receipts as proof you have met your deductible. Meridian Insurance Group, LLC. Charles G. Stout, RHU, LUTCF 301 Yamato Road • Suite 3150 • Boca Raton, FL 33431 • 561-994-2210 Ext. 17 1/08

Question: If I do not use all of my funds in the HSA for the calendar year, do I lose my money? Answer: No, your funds will remain in the account until they are used. (Rollover feature) Question: Can I use the money in my account for expenses other than medical care? Answer: Yes, however if you are not Medicare eligible the money will be treated as taxable income and you will incur a 10% tax penalty. If you are Medicare eligible the income will be treated as taxable income without a penalty. Question: If I quit my job or move to another state do I lose my HSA? Answer: No, your HSA is portable. Question: Who do I contact to answer questions about the balance of my HSA? Answer: You contact the financial institute who holds the HSA. Question: What are the benefits of signing up for an HSA? Answer: HSAs encourage tax-exempt savings for future medical costs. HSAs are owned by the individual not an employer. The individual makes all the decisions regarding the HSA. Question: Do I have to use my funds from the HSA to pay for medical services if I have not met my deductible? Answer: No, you can choose to pay for the services out of your pocket and save the funds in the HSA for future medical expenses. Question: What resources are available to me to learn more about the tax treatment of my HSA? Answer: Treasury Assistance is available to you. You can access the web site at www.treas.gov. There is also a voice mailbox at 202-622-4HSA. The e-mail address is HSAInfo@do.treas.gov. You can also contact the IRS. Meridian Insurance Group, LLC. Charles G. Stout, RHU, LUTCF 301 Yamato Road • Suite 3150 • Boca Raton, FL 33431 • 561-994-2210 Ext. 17 1/08

HSA 101- Learn about Health Savings Account

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HSA 101- Learn about Health Savings Account — Document Transcript