Health Savings Accounts (HSA)
A Health Savings Account (HSA) is a new, portable, savings account
that allows you to set aside money for health care tax-free. You must
have high deductible health insurance to open an HSA. Different
from other benefit products, an HSA rolls over from year to year
(there is no “use it or lose it”), interest is paid, money can be
invested in mutual funds, and it is owned by you, not your employer.
Considering the high costs of health care today, an HSA offers a
wide range of benefits to consumers.
Key Features of a Health Savings Account (HSA)
Affordable Health Insurance
You pay less each month for high-deductible health insurance.
Triple Tax Advantages
Contributions to your HSA are tax-deductible, tax-exempt
investment earnings on your HSA, and tax-free withdrawals from
your HSA for qualified medical expenses.
Unprecedented Control
You are now in control of how your healthcare dollars are used —
save or spend, it's your choice.
Portable
Your HSA is an account that you own and remains in place
regardless of where you work or what insurance company you are insured by.
Flexibility
Your HSA contributions can be used to pay for a wide range of
eligible medical expenses not typically covered by low deductible
health insurance or other healthcare accounts.
Planning for the Future
HSA contributions can be directed toward long-term investment
vehicles, such as mutual funds, to maximize future value of your HSA.
Yearly Savings Amounts
HSA contributions can be made in a lump sum or in any amounts or frequency you wish. Individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year. To qualify to open an HSA, your HDHP has to have a minimum deductible and your annual out-of-pocket expenses (including deductibles and co-pays) are limited.
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Maximum Contribution Amount |
Catch-up Contribution |
Minimum Deductible |
Maximum Out-of-Pocket |
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|
2008 |
2009 |
2008 |
2009 |
2008 |
2008 |
| Single |
|
$2,900 |
$2,900+ |
$900 |
$1,000 |
$1,100+ |
$5,600+ |
| Family |
|
$5,800 |
$5,800+ |
$900 |
$1,000 |
$5,600+ |
$11,200+ |
+ These amounts will be adjusted for inflation annually.
HSAs in Practice
HSAs can help individuals and families reduce healthcare costs while saving for the future. Here are some theoretical examples:
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Female in New York |
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Name: |
Sarah |
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Location: |
New York, NY |
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Marital Status: |
Single |
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Occupation: |
Self-employed Fashion Stylist |
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Annual Income: |
$50,000 |
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Deductible: |
$3,000 |
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Current Healthcare Status: |
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Sarah has no major planned health expenses, only preventive care (covered by insurance under her deductible). |
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Result: |
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Sarah pays $150 per month for her health plan
premium. She contributes $100 per month into her
HSA. She spends the money in her HSA, tax-free, on
acupuncture treatment and contact lenses. |
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| Male in Florida |
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Name: |
James |
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Location: |
Orlando, FL |
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Marital Status: |
Single |
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Occupation: |
Technology Developer |
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Annual Income: |
$90,000 |
|
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Deductible: |
$3,000 |
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Current Healthcare Status: |
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James is planning on getting LASIK surgery in the
next few years and intends to use his HSA to pay for
the service. |
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Result: |
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James' employer contributes $200 per month into
his HSA. He contributed $500 at the beginning of
2008 into his HSA (so that he could reach the
maximum contribution of $2,900 by year-end). He does
not spend money out of his HSA, and instead pays out
of pocket for occasional visits to a chiropractor. |
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| Family of Four in Iowa |
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Name: |
Townsend Family (Ages 41 and 39) |
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Location: |
Cedar Rapids, IA |
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Marital Status: |
Married |
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Children: |
Two, ages six and eight |
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Occupation: |
Retail Store General Manager |
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Annual Income: |
$80,000 |
|
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Deductible: |
$4,000 |
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Current Healthcare Status: |
|
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Mr. Townsend has diabetes, takes medicines and also sees a specialist regularly. Additionally,
one of the Townsend children has chronic asthma. |
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Result: |
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Mr. Townsend's employer contributes $250 per month into his
family's HSA and Mr. Townsend contributed an
additional $1,000 in the beginning of 2008. The
Townsends pay out of their HSA for all doctor's visits
and medications until they have met their insurance
deductible, at which time their insurance covers
almost all additional expenses. |
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| Married Elderly Couple in California |
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Name: |
Welch Family (Ages 60 and 55) |
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Location: |
Irvine, CA |
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Marital Status: |
Married |
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Children: |
Grown |
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Occupation: |
Mrs. Welch (primary insured) works at a law firm |
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Annual Income: |
$150,000 |
|
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Deductible: |
$3,000 |
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Current Healthcare Status: |
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Mr. Welch has a chronic illness that requires he
purchase expensive medicine and see specialists
regularly. |
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Result: |
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|
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Mrs. Welch's employer contributes $1,200 up front into
her family's HSA. Mrs. Welch contributes $1,800
up front into her family's HSA and another $900 for
her "catch-up" contribution. Mr. Welch's costly
doctor visits and medications are not paid out of
their HSA. They meet their insurance deductible
quickly and insurance covers almost all additional
expenses for Mr. Welch's treatments. They are saving
all the money in their HSA for planned health
retirement expenses. |
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Prospectus
