|
HEALTH
SAVINGS ACCOUNTS (H.S.A.)
ADVANTAGES
n
Tax Savings An H.S.A.
provides triple tax savings:
§
Tax deductions when you contribute
to your account
§
Tax-free earnings through investment
§
Tax-free withdrawals for qualified
medical expenses
§
Tax-free distributions can be taken
for qualified medical expenses of spouse and/or
dependents even if they are not covered by the
H.S.A.
§
For in-network providers, once the
deductible is met, the insurance company pays 100%
of the ongoing medical expenses. (There are some
exceptions such as mental health/substance abuse
see the plan for more details)
n
Security The H.S.A.
protects you against high or unexpected medical
bills.
n
Flexibility Use the funds
in your account to pay for qualified medical
expenses, including expenses your insurance may
not cover, or save the money in your account for
future needs such as:
§
Health insurance or medical expenses
if unemployed
§
Medical expenses after retirement
(before Medicare)
§
Out-of-pocket expenses when covered
by Medicare
§
Long-term care expenses and
insurance
n
Savings Save the money in
your account for future medical expenses and grow
your account through investment earnings.
n
Control You make all the
decisions about:
§
How much money to put into the
account
§
Whether to save the account for
future expenses or pay current medical expenses
§
Which medical expenses to pay from
the account
§
Whether to invest any of the money
in the account
§
Which investments to make
n
Portability You keep the
H.S.A. even if you:
§
Change jobs
§
Change your medical coverage
§
Become unemployed
§
Move to another state
§
Change your marital status
n
Ownership Funds remain in
the account from year to year (there are no use
it or lose it rules)
n
Preventative Services Not
subject to deductible and covered 100% (refer to
Highlight sheet for complete details of benefits)
QUALIFIED MEDICAL
EXPENSES (Partial List)
n
Deductibles, co-payments and
coinsurance.
n
Prescriptions and over-the-counter
drugs (i.e. aspirin).
n
Dental services including braces,
bridges and crowns.
n
Vision care including glasses and
lasik eye surgery.
n
Psychiatric and certain
psychological treatments.
n
Long-term care services.
n
Medically related transportation and
lodging.
n
Certain health premiums including
COBRA (but not premiums while an active employee)
The detailed list of
qualified medical expenses is the IRS Section
213(d). Non-prescription (over the counter)
medications are described in Revenue Ruling
2003-102, 2003-38 (I.R. B. 559)
DISAVANTAGES
n
If you incur major expenses early in
the plan year, you may have to pay more out of
pocket versus your current plan.
n
Office visits you will no longer
pay a co-pay at the time of the office visit. You
will be liable for the discounted office visit
charge when you receive your Explanation of
Benefits report (up to the deductible).
n
Prescription drugs you continue to
pay the discounted price (up to the deductible).
n
If you withdraw funds for
non-eligible expenses, the withdrawal will be
subject to income taxes as well as a 10% penalty
(if under age 65).
REMIDER
KEEP the receipts for all
your expenditures. If audited by IRS, to avoid
the unfavorable tax consequences outlined above,
you will have to prove that you used the money in
your account for only qualified medical expenses.
|