Q: What is a Health Savings Account?
A: A Health Savings Account is a tax-advantaged account participants can use to pay for qualified health expense incurred while under a high-deductible medical plan. HSA dollars may be contributed by an employer, indididual or family member and accumulate with interest over time.
Q: How are funds in the HSA typically utilized throughout the year?
A: Indivuals must satisfy the annual deductible and the HSA can be used to pay this deductible. Once the deductible has been met, the insurance portion of the medical plan takes over. HSA funds can then be used to pay for coinsurance or other expenses not covered by the medical plan. At the end of the year, unused funds may be rolled-over to the next plan year.
Q: Who is eligible to participate in a Health Savings Account?
A: An eligible indivual:
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Must be covered by a high-deductible health plan
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Cannot be covered by any other medical plan that is not a high-deductible plan
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Is not entitled to Medicare benefits
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May not be claimed as a dependent on another person's tax return
Q: What are the requirements for the high-deductible medical plan?
A: The plan must have an annual deductible of at least $1,000, and an annual, in-network out-of-pocket maximum of no more than $5,000. For family coverage, the annual deductible must be at least $2,000 with an annual, in-network out-of-pocket maximum of no more than $10,000.
