FAQ

	Q:  What are Health Savings Accounts -- HSAs? A Health Savings Account (HSA) is an account that you can put money into to save for future medical expenses.  There are certain advantages to putting money into these accounts, including favorable tax treatment.  HSAs were signed into law by President Bush on December 8, 2003.
	Q:  Who can have an HSA? Any adult can contribute to an HSA if they:

           w Have coverage under an HSA-qualified "high deductible health plan" (HDHP);

           w Have no other first-dollar medical coverage (other types of insurance like specific 

             injury insurance or accident, disability, dental care, vision care, or long term care 

             insurance ARE permitted)

Q:  What are the advantages of switching to an HSA?

        Security    Your high deductible insurance and HSA protect you against high or 

        unexpected medical bills;

        Affordability    You should be able to lower your health insurance premiums by 

        switching to health insurance coverage with a higher deductible;

        Flexibility    You can use the funds in your account to pay for current medical

        expenses, including expenses that your insurance may not cover, or save the 

           money in your account for future needs, such as:

           w Health insurance or medical expenses if unemployed;

           w Medical expenses after retirement (before Medicare);

           w Out-of-pocket expenses when covered by Medicare;

           w Long-term care expenses and insurance;

          Savings    You can save the money in your account for future medical expenses 

          and grow your account through investment earnings.

          Control    You make all the decisions about:

           w How much money to put into the account;

           w Whether to save the account for future expenses or pay current medical 

           expenses; 

           w Which medical expenses to pay from the account;

           w Which company will hold the account;

           w Whether to invest any of the money in the account;

           w Which investments to make;

           Portability    Accounts are completely portable, meaning you can keep your HSA

           even if you:

           w Changes jobs;

           w Change your medical coverage;

           w Become unemployed;

           w Move to another state;

           w Change your marital status;

           Ownership    Funds remain in the account from year to year, just like an IRA.   

           There are no "use it or lose it" rules for HSAs. 

           Tax Savings -- An HSA provides you triple tax savings:

           (1) Tax deductions when you contribute to your account;

           (2) Tax-free earnings through investment; and,

           (3) Tax-free withdrawals for qualified medical expenses.

Q:  What are the new annual contribution levels for HSAs?  For 2007, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2,850.  For family coverage the maximum HSA contribution is $5,650.    Here are other changes for 2007: w Under recent legislation, these amounts are the maximum HSA contribution amount regardless of the amount of the HDHP deductible. w Catch up contributions for individuals who are 55 or older is increased by statue to $800 for 2007. w Both the HSA contribution and catch up contribution apply pro rata based on the number of months of the year a taxpayer is an eligible individual. w Under recently enacted legislation, if you have HDHP coverage as of December 1, 2007, you are allowed the full, non-pro rated contribution for the year.  However, if you cease to remain an eligible individual throughout 2008, the extra amount contributed is included in income and subject to an additional 10 percent tax.   New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs: w The maximum annual out-of-pocket amounts for HDHP self-coverage increase to $5,500 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $11,000. w Minimum Deductible Amounts for HSA-Compatible HDHPs:   For 2007, the minimum deductible for HDHPs increases to $1,100 for self only coverage and $2,200 for family coverage.   Note that a fiscal year plan that satisfies the requirements for an HDHP on the first day of the first month of its fiscal year may apply that deductible for the entire fiscal year.   Source:  US Department of the Treasury; January 4, 2007

Q:  Where can I find out if Health Savings Accounts (HSAs) are right for me?

          We will be glad to guide you through the decision process.  For more information

          about HSAs, click on this link:  U.S. Treasury - HSA Frequently Asked Questions.