ARE YOU CONSIDERING AN HSA? COME TO EBA FOR HELP!

HEALTH SAVINGS ACCOUNTS LET PEOPLE KEEP SOME OF THE MONEY THEY USED TO SEND TO INSURANCE COMPANIES….AND 100% OF THAT MONEY CARRIES FORWARD, GROWS AND COMES OUT TAX FREE*!

HSA’s give the employee and/or the employer the ability to set aside pretax money for out of pocket expenses. Employee has access to 100% of deposited contributions throughout the plan year and can carry over 100% of unused funds for future qualified expenses or for retirement. Participants eligible for Medicare can withdraw funds for nonqualified expenses with no penalty. The catch…an HSA must be attached to an approved “High deductible health plan (HDHP). These plans can not have office visit, emergency room or prescription copays*.

High Deductible Health Plan Rules

• Minimum deductible of $1,000 for singles, $2,000 for familie
• Maximum out of pocket: $5,000 for singles and $10,000 for families
• No office visit, emergency room or prescription co-pays allowed (See 3/30/04 guidance)

Typically a plan will look as follows

• Single employee pays first $2,000 in expenses, Families $5,000
• Carrier pays 100% of expenses in excess of deductible in network
• Carrier pays 80% or 60% of expenses in excess of deductible out of network
• $2,000 deductible “cross accumulates” between in & out of network
• Prescription discount card and mail order vendor
• Employer typically deposits half of the deductible into the employees Health Savings Account.
• Employees each decide how much of the remaining deductible they want to “fund” in their Health Savings Account on a weekly basis.
• If they do not spend the money they set aside on the Health Savings Account, that money carries forward to the next plan year.

Tax Treatment

• 100% of money goes in tax free from employer or employee
• Money inside a Health Savings Account grows tax free
• Money comes out tax free for qualified expenses. The same list we have shown for flexible spending accounts
• 10% penalty + regular income taxes for non-qualified withdrawals.
• Those who qualify for medicare through their age can make non qualified withdrawals without penalty

3/30/2004 IRS Guidance

• Preventative Care may be covered before the deductible.
• Prescription cards with co-pays are allowed through 2006
• An HSA established prior to April 5, 2005 may reimburse employees for expenses incurred on or after January 1, 2004 or when they became eligible. (enrolled in a high deductible health plan)

For more information on HSAs, please contact us at 800-224-2522. X365
• tax free withdrawals for all items listed in IRS Section 213.

Click here to contact us

WE DO MORE TO MANAGE YOUR BENEFITS