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INTRODUCTION
What is a HSA?
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| A Health Savings Account is a savings or investment account created primarily for the purpose of paying for medical expenses. The account does not have to be used to pay medical expenses, but works most advantageously when it does. Health Savings Accounts (HSAs) were created by a provision contained in the Medicare legislation passed in November 2003 and signed into law by President Bush December 8, 2003. The legislation is designed to encourage the use of high deductible health insurance plans together with personal savings to create a more efficient method to fund the increasing cost of medical care. The law attaches substantial tax advantages to a qualifying savings account. |
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How Does A HSA Plan Work?
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Traditional Health Plan Design
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HSA Plan Design
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The Health Savings Account is used to pay for eligible medical expenses not paid for by insurance, at your discretion. Health Savings Accounts may be established January 1, 2004 and after.
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Who is Eligible to Establish a HSA?
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| An “eligible individual” is an individual, in any month, who: |
| 1. Is covered under a qualifying high-deductible health plan (HDHP); |
2. Is not also covered by any other health plan that is not a HDHP (with certain exceptions
for plans providing limited coverage); |
| 3. Is not entitled to benefits under Medicare; and |
| 4. May not be claimed as a dependent on another person's tax return. |
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