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HSA
FAQ - Questions & Answers
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Qualifying
Plans:
HSA
Contributions:
HSA
Investments:
HSA
Distributions:
The
Basics:
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What
is a Health Savings Account? |
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An
HSA works like an IRA, except that
money is used to pay health care costs.
Participants enroll in a relatively
inexpensive high deductible insurance
plan. Then, a tax-deductible
savings account may be opened to cover
current and future medical expenses.
The money deposited, as well
as the earnings, is tax-deferred.
The money can then be withdrawn
to cover qualified medical expenses
tax-free. Unused balances roll
over from year to year.
Everyone
(not just the self-employed or small
businesses) with a qualified high
deductible insurance plan is eligible
for a tax-deductible HSA.
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Why
High Deductible Health Insurance? |
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To get the benefits of an HSA, the law requires
that the savings account be combined with
High Deductible Health Insurance. High Deductible
Health Insurance costs less than traditional
low deductible coverage, because the insurance
company does not have to process and pay
claims for routine, low-dollar medical care.
For
2008, a High Deductible Insurance Plan is
a health plan with a minimum deductible
of $1,100 for self-only coverage and $2,200
for family coverage. The maximum out-of-pocket
expenses for allowed costs must be no more
than $5,600 for self-only coverage and no
more than $11,200 for family.

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How
does a Health Savings Account work? |
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You
obtain coverage under a qualified health
insurance plan with a minimum deductible
of $1,100 for singles and $2,200 for families.
You are then allowed to deposit up
to $2,900 for singles or $5,800
for families into your Health Savings Account
for 2008. Older Americans can save
even more. You do not have to
itemize your deductions on your federal
income taxes to deduct your contributions
to an HSA. You can use the savings
account to pay for your lower-dollar medical
expenses, or those that are not covered
by the health plan. Once you
meet the deductible, the health insurance
covers your medical expenses as defined
in the policy.

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How
much does HSA-qualified health insurance cost? |
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Because HSA-qualified health plans all have
high deductibles, they typically have much
lower premiums than traditional health insurance
plans. The plans are individually
priced based on age, residence, health history,
build, date of enrollment, type of plan,
deductible, PPO network options selected,
billing method and other services. Our
instant
quote system will quickly provide
you rates on the plans available in your
area.

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I
have some medical history. How do I
know if I will qualify for a high
deductible HSA Insurance plan? |
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When you apply for HSA-qualified plan, an
underwriter will review your application
to determine your eligibility. If
you have pre-existing health concerns, it
may take longer for the insurance carrier
to issue a policy. If you are concerned
about having to submit your initial payment
with your application and then having to
wait for an answer, Time Insurance and a
couple other companies allow you to submit
your application C.O.D., meaning that you
can receive an approval before making your
first monthly payment. You can also
speak to an advisor with HSA
for America, who can conduct
a pre-screen with the insurance company
before submitting the application to get
an initial opinion from the underwriting
department.
Underwriting
guidelines for HSA-qualified plans are normally
similar to the companys underwriting
guidelines for any of the other policies
they may offer.

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When
you are paying for your medical expenses from
your HSA account, how does your insurance
company know when you have paid up to your
deductible? |
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There are two options...
If
you use an in-network provider, they can
file your claim for you. This is the
smart way to work things, as it will ensure
that you receive the company's discounted
PPO price, instead of having to pay the
full price.
Or,
you could simply save the bills and submit
them to the company yourself, either all
at once, or after you have reached a certain
limit in bills.

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How
do I establish an HSA? |
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"I
feel like I have a personal advisor who is interested
in my family and its needs"
My
experience working with HSA
for America has been great.
I feel like I have a personal advisor who is interested
in my family and its needs. What really sets
you apart from other companies I have done business
with is the personal touch.
I
have recommended you to others, and will continue
to do so. Keep up the good work.
Greg
Wilber
Service Administrator
Aliquippa, PA
Read
More...
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Qualifying
Plans:
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What
is a "Qualifying High Deductible Health
Plan"? |
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Only certain plans are eligible to be used
in conjunction with Health Savings Accounts.
For 2008, a high deductible insurance plan
is a health plan with a minimum deductible
of $1,100 for self-only coverage and $2,200
for family coverage. The maximum out-of-pocket
expenses for allowed costs must be no more
than $5,600 for self-only coverage and no
more than $11,200 for family coverage. Other
restrictions apply, including reporting
requirements established by the IRS.

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How
do I know if my health plan is a "Qualifying
High Deductible Health Plan"? |
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The health insurance company or plan administrator
will provide a written statement verifying
this status. The words "Qualifying
High Deductible Health Plan" or a reference
to IRC Section 223 will be included in the
declaration page of the policy or another
official communication from the insurance
company. If this documentation is
not available, it is NOT a qualifying plan.

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What
makes a health insurance plan HSA-qualified? |
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The plan must meet the deductible and other
design requirements that are adjusted each
year and the health insurance company must
agree to report the list of qualifying policyholders
to the IRS. The Treasury will review
and qualify health plans at the request
of the sponsoring organization. Not
all high-deductible health insurance plans
are HSA-qualified even if they meet deductible
and out-of-pocket requirements.

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Why
are all health insurance policies that meet
the stated requirements for High Deductible
Health Plans not considered HSA-qualified? |
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In large part because the health insurance
company must agree to report the list of
qualifying policyholders to the IRS. Health
insurance companies must also be willing
to meet both the federal requirements as
well as the state insurance requirements.
Some sticking points are "per person
deductibles" and "mandated coverage"
that may be required under state insurance
laws but are disallowed under the federal
HSA laws. This may involve considerable
expense that insurance companies are not
willing to assume at this time.

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With
a high-deductible health plan, will I have
to pay full price for doctor visits, or will
I receive a PPO discount? |
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Most
qualifying high-deductible health plans
are PPO plans, though there are some indemnity
plans that do not have a PPO network.
If you have a PPO plan, any visits to a
doctor in your PPO network will be re-priced
according to the discount negotiated by
the PPO, before you are billed. Having
access to a PPO network can mean substantial
discounts in what you pay for your health
care, even before you meet your deductible.

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Am
I eligible for an HSA if I have an HSA-qualified
plan as my primary coverage but am also covered
by my spouses employer-provided (non-HSA)
plan? |
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You
can only contribute to your HSA only when
you have an HSA-qualified plan. If
you are also covered by a spouses
non-HSA plan, then you would no longer qualify
to contribute to your HSA. However,
you can still use the money in it to pay
for qualified medical expenses, or you can
let it continue to grow on a tax-deferred
basis.

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"This
was the smoothest experience we've ever had getting
health insurance"
This
was the smoothest experience we've ever had getting
health insurance. I don't really remember how
we stumbled on to your web site, but I'm glad we did.
Judithe
Bernthal
Retired
Blairsville, GA
Read
More...
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HSA
Contributions:
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How
much can be contributed to an HSA in 2008? |
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Annual contributions for 2008 are capped
at either the high deductible of $2,900
for an individual and $5,800 for a family.
- The
annual maximum HSA contribution
will change each January 1st based
on the Consumer Price Index (CPI).
There are no maximum limits
on the account accumulation.
- The
legislation provides for an additional
contribution (and tax deduction)
for those who turn age 55 before
the end of the tax year. The
additional contribution amount is
$900 for 2008 and increases annually
to an additional $1,000 in 2009.
If you had HDHP coverage for the
full year, you can make the full
catch-up contribution regardless
of when your 55th birthday falls
during the year.
- If
both spouses are eligible individuals
and both spouses have established
an HSA in their name and turn 55,
then both can make catch-up contributions.
If only one spouse has an HSA in
their name, only that spouse can
make a "catch-up" contribution.
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Contributions may be made by anyone on behalf
of the account beneficiary.
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How
is the contribution limit determined? |
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The maximum contribution limit is $2,900
for individuals and $5,800 for families,
regardless of your deductible or when you
get your plan in place. However, If
you do not keep your coverage for at least
12 months, the contribution limit will be
pro-rated, based on the total number of
months in which your HSA-eligible health
insurance was in effect. For example,
if your coverage begins on March 1st and
is in effect only through December, you
will only be allowed to deposit 10/12 of
the annual contribution limit.

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What
are the eligibility requirements for contributing
to an HSA account? |
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To be eligible to contribute, the individual:
- Must
be covered by a qualifying High Deductible
Health Plan (HDHP)
- Cannot
be on Medicare
- Cannot
be covered by other health insurance that
is not an HDHP (excluding accident plans
or dental plans)
- Cannot
be eligible to be claimed as a dependent
on another person's tax return

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Can
another person who is over 65 contribute to
the HSA of an individual under 65? |
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Yes,
as long as the contribution is made into
an account of an eligible individual.

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Can
individuals make their entire contribution
to the HSA at the beginning of the year? |
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Individuals
can contribute their entire contribution
at the beginning of the year, up to the
applicable contribution limit. They
might, however, have to make a corrective
distribution later in the year if the individual's
eligibility status changes during the year
(for instance, if they become covered under
another non-qualifying plan, or if their
HDHP coverage ends).

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Can
an individual contribute a certain amount
of dollars over the deductible amount to cover
the set up and administrative fees of the
HSA account? |
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Fees
can be paid directly to the HSA administrator
without impacting the contribution limit.
Alternatively, administrative fees can
be paid from the HSA without incurring taxable
income.

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Does
my HSA need to be set up with my Health Insurance
Company? |
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No.
The HSA can be set up with any qualified trustee
or custodian. Many people choose to
open their HSAs with a provider that is different
from their insurance company to take advantage
of lower fees or greater investment options,
and to establish independence in the event
that they change insurance providers. Please
see our list of HSA
administrators for more information.

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Do
I have to have "earned income" from
a job (as opposed to income from dividends
and interest) in order to deduct my HSA contributions
for income tax purposes? |
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HSA contributions are tax deductible, regardless
of the source of your income.

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Do
the tax benefits phase out at certain income
levels? |
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Unlike
many other tax breaks, there aren't any income
limits. Anyone who buys a qualified
high-deductible policy can open an HSA.

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Do
contributions to an HSA in any way affect
my ability to contribute to an individual
retirement account (IRA)? |
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No.
Your HSA contributions won't affect your IRA
limits -- $5,000 per year or $6,000 for those
over 55. It's just another tax-deferred
way to save for retirement, with the added
advantage being that you can withdraw funds
tax-free if they are used to pay for medical
expenses.

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Do
you recommend funding my HSA with a rollover
from my IRA? |
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You
can fund your HSA with a one-time rollover
from your IRA. If you can afford to
fully fund your HSA without using a rollover
from your IRA, you will get a full tax-deduction
for your HSA contribution. However,
if you do not have enough money available
to fully fund your account, moving money from
your IRA to your HSA is a smart move.
It will protect this money from ever being
taxed if it is used to pay qualified medical
expenses.

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How
does a spouse's health coverage impact contribution
limits? |
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If
you have an HSA, but your spouse has separate
health coverage, the following special rules
may apply:
- If
your spouse has non-qualifying family
coverage that includes you, it makes you
an ineligible individual,
and you may not contribute to an HSA.
- If
your spouse has an individual HSA-qualifying
plan, then you would have to subtract
your spouses contribution from the maximum
that you could otherwise contribute.

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How
does a domestic partner's health coverage
impact contribution limits? |
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Unlike
a spouse, a domestic partner's health coverage
will generally not affect your ability to
contribute to your HSA, even if you were to
cover your domestic partner under your HDHP.
Because no rule requires domestic partners
to divide an HSA contribution in the manner
that married individuals are required to,
it appears that a domestic partner who is
covered under an account owner's HDHP could
open their own HSA and contribute the full
amount of the deductible or the statutory
maximum (whichever is less).
Neither
the Treasury nor the IRS has indicated that
there is any problem with an account owner
covering a domestic partner under an HDHP
and having the domestic partner's expenses
count toward satisfying the family deductible
under the HDHP, notwithstanding that these
individuals are not related. However,
most individual insurance plans will not
cover domestic partners, so the two individuals
would probably need to get individual policies.
Unlike
a spouse, you may not take a tax-free distribution
from your HSA to pay for your domestic partner's
expenses, unless your domestic partner is
considered to be a dependent under Code
section 152.

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"You
made the entire process very easy"
You
made the entire process very easy. You suggested
a policy, I examined your suggestion, shopped your
rates, and concluded you were offering what I needed
at a fair price. I have recommended you to
others and am adding a link to your firm on a website
that I own.
Bo
Rathgeber
Palos Verdes Estates, CA
Read
More...
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HSA
Investments:
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Where
can I invest my money? |
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An extensive list of qualified HSA administrators
and trustees is posted on our HSA
Administrators page. Investment
options vary by administrator, and include
savings accounts, stocks, bonds, and mutual
funds.

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