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Health Savings Account FAQs
This chart is a guideline and not intended to give tax advise to any member. Each member needs to seek one's own tax advice.
- HSA Questions
- Who is eligible to open an HSA?
- Who is not eligible to open an HSA?
- What is an HDHP?
- What are the possible benefits of a Health Savings Account?
- What are the regular contribution limits?
- What are the Catch-Up Contributions?
- What Rollover Contributions are allowed?
- What are some facts about HSA Distributions?
- What is a Qualified Medical Expense?
- What distributions are exceptions to the 10% penalty tax?
- What are the Death Beneficiary rules?
- Can I use my HSA account to keep my $50 minimum share requirement.
- Can a Health Savings Account (HSA) have a joint owner?
HSA Questions
- Who is eligible to open an HSA? Return to Top
- An individual or a family.
- Not a trust or business.
- Must be covered by a high deductible health plan (HDHP).
- Some one who is self-employed and covered by an HDPH.
- Members who are active in an health reimbursement (HRA) or flexible spending account (FSA) need to check with their employer to determine if the HRA or FSA has been properly coordinated with HSA rules.
- Who is not eligible to open an HSA? Return to Top
- Members enrolled in Medicare.
- Members receiving veterans affairs medical benefits.
- Members who can be claimed as a dependent on another person’s tax return.
- What is an HDHP? Return to Top
- HDHP is a High Deductible Heath Plan. It is an HSA eligible health insurance plan that has a high deductible/out of pocket expense that must be met before coverage starts.
- To qualify as an HDHP the minimum deductible must be at least $1,100 for an individual and $2,200 for a family coverage.
- There is also a maximum deductible/out of pocket expense cap of $5,600 for an individual and $11,200 for a family.
- What are the possible benefits of a Health Savings Account? Return to Top
- The earnings in the HSA are tax deferred, and may be used tax free.
- The member decides which medical expenses to pay from the HSA.
- Funds can be saved and used during retirement.
- There is no use-it or lose-it provision as in the flexible spending plan.
- The HSA is not tied to an employer.
- The HSA increases in value with tax deferred dividends.
- The HSA funds can be used for qualified medical expenses that are traditionally not covered by insurance.
- What are the regular contribution limits? Return to Top
- Regular contribution limits are affected by:
- HDHP deductible amount.
- Age (catch-up contributions apply).
- Self-Only Coverage
- $2,850 – 2007 limit, additional $800 for over 55
- $2,900 – 2008 limit, additional $900 for over 55
- Family Coverage
- $5,650 – 2007 limit
- $5,800 – 2008 limit
- Regular contribution limits are affected by:
- What are the Catch-Up Contributions? Return to Top
- An additional contribution may be made by individuals at least age 55 but younger than age 65
- For 2007 the catch up is $800
- For 2008 the catch up is $900
- For 2009 and after the catch up is $1000
- Applies to eligible individuals with self-only coverage or family coverage
- An additional contribution may be made by individuals at least age 55 but younger than age 65
- What Rollover Contributions are allowed? Return to Top
- HSA to HSA
- Archer MSA to HSA
- One time transfer from an IRA to HSA transfer is limited to the maximum HSA contribution for the year. Note: the amount contributed is not allowed as a deduction. (Other restriction apply)
- Rollovers from health FSAs and HRAs into HSAs through 2011(Restriction do apply)
- HSA to HSA
- What are some facts about HSA Distributions? Return to Top
- Distributions can be taken any time
- The HSA owner is responsible for determining if expenses qualify.
- Tax-free if used to pay for qualified medical expenses
- Tax and 10% penalty apply to non-qualified distributions
- What is a Qualified Medical Expense? Return to Top
- An amount paid by an HSA owner, spouse, and dependents for certain types of medical care not covered by insurance or another health plan.
- Examples are:
- The cost of diagnosis, cure, treatment or prevention of disease. This includes prescription and non-prescription drugs.
- Transport essential to medical care above.
- Qualified long term care services
- Premiums for COBRA following termination of employment.
- Premiums for qualified long term care insurance.
- Dental, vision, and other services that may not be covered under the HDHP.
- Must be incurred after an HSA is established; earlier expenses are non-qualified.
- For more information on qualified medical expense please visit the IRS website http://www.irs.gov/pub/irs-pdf/p502.pdf
- What distributions are exceptions to the 10% penalty tax? Return to Top
- Death
- Disability
- Attainment of age 65
- But may be subject to federal income taxes if not used for medical expenses
- What are the Death Beneficiary rules? Return to Top
- Spouse:
- HSA becomes the HSA of the spouse.
- Distributions used to pay for qualified expenses of the deceased or surviving spouse are tax-free.
- Non-Spouse:
- HSA ceases to be an HSA on the date of death
- Date of death fair-market value included in beneficiary’s income, reduced by distributions used to pay for qualified expenses of the decedent within one year after death
- Income tax but no penalty tax
- Can I use my HSA account to keep my $50 minimum share requirement. Return to Top
- No, an HSA account cannot be used to secure the $50 minimum share requirement.
- Can a Health Savings Account (HSA) have a joint owner? Return to Top
- No, the HSA is designed for individuals enrolled in High Deductible Health Plans.
