Health Savings Accounts (HSA) were brought about by legislation signed in 2003.
Health Savings Accounts expand the provisions and enhance the benefits associated with Medical Savings Accounts.
Health Savings Accounts can be funded by both the employer and/or employees
Employer contributions are tax deductible but cannot be discriminatory.
Contributions to HSA accounts can be made up to the time the individual files their income tax, excluding extensions.
Health Savings Accounts allow unused balances to remain in the account until used.
Health Savings Accounts allow self employed persons and members of groups to be participant in the plan as long as they are under the age of 65, have a qualified high deductible health plan and are not covered under another health plan.
Basically individuals with $1000 deductible health plans with $5000 cap on “out of pocket” costs, and family plans with a $2000 deductible and $10,000 cap on “out of pocket” costs can have Health Savings Accounts.
Individuals can contribute up to $2600 and those with family plans can contribute up to $5150 tax deductible, exempt from FICA and FUTA taxes into their Health Savings Account.
Rollovers from Medical Savings Accounts to Health Savings Accounts are permitted.
Those between age 55-65 have an additional $500 catch-up provision which can be contributed to the HSA plan.
Distributions from Health Savings Accounts are not taxable as long as they are used for a qualified medical expense and include; premiums for long term care, chiropractic services, COBRA coverage, medical, dental, vision, and or any other necessary medical expense as defined by IRS rules.
Monies in the accounts grow on a tax deferred basis.
Health Savings Accounts are permanent accounts and don’t expire.
Monies taken from Health Savings Accounts and not used for health purposes will be considered a taxable distribution, with IRS penalties.
