Health Savings Account (HSA)

 

An HSA is a Health Savings Account that allows you to save money in a tax-free* account. Because these accounts have certain tax advantages you must meet the following IRS requirements to be eligible and qualify for an HSA:

 

• Participate in a qualified high deductible health plan (HDHP), such as Consumer Choice
• Have no other medical coverage (unless it is also a qualified HDHP)
• Are not enrolled in Medicare
• You are not claimed as a dependent on someone else’s tax return

An HSA is a health care savings account that provides a three-way tax advantage

• You can contribute to the account on a tax free basis – and receive monthly employer premium rebate credits. You decide when to spend or save your deposits.
• Your account earns interest income right away - tax free! When you have a minimum account balance of $1,000, you can choose to invest in a wide selection of mutual funds offered through Bank of America’s program;
• When you withdraw your funds to pay for eligible health care expenses, they are typically tax free.

The money in your HSA can be used on a tax-free basis to pay for:

• Your medical plan deductibles
• Eligible health care expenses not covered by insurance (IRS Publication 502)
• Health expenses during retirement
• You can use your money for any purpose (subject to income and penalty tax if it’s not an eligible expense)
• After reaching age 65, you can use HSA savings for any purpose (subject to normal income tax)

 

HSA Contributions

 

The annual maximum HSA contribution allowed for 2010 is $3,050 for individual (Employee only) and $6,150 for Family Coverage (all other coverage tiers). If you are 55 or older in 2010 you can contribute an additional $1,000 “catch-up” contribution.

 

Maximum contribution amounts include medical premium rebates but not HSA rollover funds from previous years. Unused funds are not forfeited; money not used in the account will roll forward from year to year.

 

 

Tax Form Filing

 

The IRS requires you file a Form 8889 with your federal tax return if you made contributions or took withdrawals from an HSA during the tax year.

 

 

A Health Saving Account Offers You

• Flexibility
  Unused money rolls over from year to year
• Portability
  Money in your account goes with you if you retire or leave the company
• Value
  Account is tax-free* and contributions up to the federal limit can be made each year. In addition, HSA money can be invested.