What is a Health Savings Account?

• Health Savings Accounts (HSA) when combined with an HSA-compatible health plan, offers a more affordable approach to healthcare. This gives you more control over your healthcare financing. The health plans typically provide lower premiums and the HSA provides tax benefits when contributions are made, as funds grow and when used to pay for qualified medical expenses. This can lead to significant savings! HSAs enable you to pay for current health expenses and save for future medical expenses including retiree expenses on a tax-free basis.

Who is eligible for a Health Savings Account?

• To be eligible for a Health Savings Account, an individual must be covered by a HSA-qualified High Deductible Health Plan (HDHP) and must not be covered by other health insurance that is not an HDHP.

Does the HDHP policy have to be in my name to open an HSA?

• No, the policy does not have to be in your name. As long as you have coverage under the HDHP policy, you can be eligible for an HSA (assuming you meet the other eligibility requirements for contributing to an HSA). You can still be eligible for an HSA even if the policy is in your spouse’s name.

I’m on Medicare, can I have an HSA?

• You are not eligible for an HSA after you have enrolled in Medicare. If you had an HSA before you enrolled in Medicare, you can keep it. However, you cannot continue to make contributions to an HSA after you enroll in Medicare.

What’s the difference between a Health Savings Account (HSA) and a Flexible Spending Account (FSA)?

• The tax benefits of both plans are quite similar, yet there are several differences. HSA balances roll over from year to year and continue to grow tax deferred. Money in your FSA plan must be spent by the end of the Plan Year or you lose it. Remember, that FSA’s can save you money even if you don’t spend every dollar. Also, you can open an FSA plan without participating in a HDHP.

How much can I contribute to my HSA?

	2010	2011
Single HDHP	$3,050	$3,050
Family HDHP	$6,150	$6,150
Catch-Up Contribution (age 55 by end of the year)	$1,000	$1,000

• You may contribute up to the annual maximum as long as your Health Savings Account was established by December 1 of that calendar year.

If I set up an HSA through my employer, what happens if I switch jobs?

• You can keep the money in an HSA account even after you leave that job.

What happens if I use the money in the HSA for non-medical expenses?

• If the money is used for anything other than qualified medical expenses, the expenditure will be taxed and, for individuals who are not disabled or over age 65, subject to a 10% penalty.

Can I use the money in my HSA to pay for medical care for a family member?

• Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty. This is one of the great advantages of an HSA.

Can I use my HSA to pay for medical expenses incurred before I set up my account?

• No. You cannot reimburse qualified medical expenses incurred before your account is established.

How do I pay for my qualified expenses using my HSA funds?

• You may use your FBA Benefits Card to pay for qualified expenses using your HSA funds. Your FBA Benefits Card can be used for any plan you have through Flexible Benefit Administrators, Inc. Your HSA custodian will also provide you checks. If you do not use your FBA Benefits Card, you can pay out of pocket with your own money and reimburse yourself for the expense by writing one of these checks made payable to yourself. We strongly encourage you to also keep your receipts in case you need to support your expenditures if audited.

Can the funds in an HSA be invested?

• Yes, you can invest the funds in your HSA. The same types of investments permitted for IRAs are allowed for HSAs. Your FBA HSA offers over 80 mutual funds for your selection. Please note that you cannot roll HSA funds over into an IRA. They have to stay in an HSA or be rolled into another HSA

Can I borrow against the money in my HSA?

• No. You may not borrow against the funds in your HSA.

What happens when I reach age 65?

• You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance.