Health Savings Account Plan
UPDATE: Starting in 2011 you will no longer be able to purchase over the counter drugs with HSA funds. The penalty for using HSA funds for things other than qualified medical expenses goes up from 10% to 20%.
A Few HSA Basics
In 2003 the Medicare Prescription Drug Improvement and Modernization Act expanded the health benefits available to consumers such as the self-employed and employer groups of any size by authorizing the use of health savings accounts known as “HSA”s. Designed to allow consumers more control over their health care expenses, these health savings accounts permit businesses and consumers to take advantage of high deductible health insurance plans with lower premiums. At Michael Higgins Insurance, we encourage our clients to seriously consider enrolling in a high deductible health plan and opening an HSA savings account at your bank of choice. It’s a smart way to lower your Arizona health insurance costs.
A health savings account (HSA) is a tax-exempt trust or custodial account to be used for paying qualified medical expenses. To open an HSA, you must enroll in a qualified high-deductible health plan such as the BluePortfolio Plan.
An HSA provides potential tax advantages for eligible individuals. Conveniently there are NO “use-it-or-lose-it” restrictions, so money in the health savings account can be rolled over into the next year.
Who Is Eligible For an HSA?
Any individual who is covered under a qualified high-deductible health plan, not entitled to benefits under Medicare, and not claimed as a dependent on another person’s tax return is generally eligible. Michael Higgins cautions that having other health coverage in addition to a qualified high-deductible health plan such as BluePortfolio may make you ineligible to contribute to an HSA.
How Do I Contribute to an HSA?
Qualified members with a high-deductible health plan may have contributions added to their HSA by themselves as an individual or employee, by an employer, or by joint employer/employee funding. Contributions up to the annual maximum may be made as late as April 15 of the following tax year. Additional “catch-up” contributions, as permitted by federal law, are allowed for individuals between the ages of 55 and 64. Michael Higgins can tell you about the special rules for spouses.
Where to Open an HSA
Blue Cross® Blue Shield® of Arizona is contracted with HSABank, a FDIC-insured bank and qualified HSA trustee. Qualified members may open a health savings account with HSABank or choose another HSA administrator. Here are the links to open an account: The first link is for individuals/families, and the second is for employers/employees. HSABank was one of the first banks in the HSA business, and I have found them to be very reliable.
Individual/Family: https://secure.hsabank.com/enrollment?ain=7454
Employer/Employee: https://secure.hsabank.com/relations/documents/employersignup.aspx?ain=7454
For more information about HSA Bank or to obtain paper enrollment forms instead of applying online, please call HSA Bank at (866) 471-5275, Monday thru Friday: 7 a.m. to 9 p.m. CST.
Michael Higgins Insurance provides only general information about health savings accounts. Legal requirements are always subject to change. Michael Higgins Insurance does not render tax, investment or legal advice. Consulting with your tax or legal advisor should prevent any problems regarding satisfying certain eligibility criteria.
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