What is a Health Savings Account?
A Health Savings Account (HSA) is a tax-exempt trust or custodial account established exclusively for the purpose of paying or reimbursing qualified medical expenses of you, your spouse, and your dependents.
Am I eligible for an HSA?
You are eligible for a regular HSA contribution if, with respect to any month, you:
- Are covered under a high-deductible health plan (HDHP) on the first day of such month;
- Are not also covered by any other health plan that is not a HDHP (with certain exceptions for plans providing preventive care and limited types of permitted insurance and permitted coverage);
- Are not enrolled in Medicare; and
- Cannot be claimed as a dependent on another individual’s tax return.
What is a HDHP?
A HDHP is a plan with an annual deductible no less than $1,100 for self-only coverage and $2,200 for family coverage in 2008.
Are There Other Requirements for the HDHP?
Yes. For HSA purposes, the HDHP must limit out-of-pocket expenses to no more than $5,600 for self-only coverage and $11,200 for family coverage in 2008.
What are an HSA Owner’s Responsibilities?
If you are eligible, you can establish an HSA in much the same way you would establish an IRA – with a qualified trustee or custodian. Each year, you are responsible for determining your allowable annual HSA contribution and whether you have qualified medical expense eligible for reimbursement with non-taxable HSA distributions.
Who Can Contribute to My HSA?
If you meet the eligibility requirement for an HSA, you, your employer, your family members, and any other person (including non-indiviudals) may contribute to your HSA. This is true whether you are self-employed or unemployed.
How Much Can I Contribute to My HSA?
In 2008, the maximum annual contribution amount is the standard limit. Contributions limits of $2,900 for self-only coverage and $5,800 for family coverage in 2008. The 'catch-up' contribution amount for 2008 is $900.
Additionally, a “catch-up” contribution is available for eligible individuals who are age 55 or order by the end of their taxable year and have not enrolled in Medicare.
