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Your Internet Resource for HSA Information
Fast Facts About Health Savings Accounts (HSA)
- HSAs are similar to Medical Savings Accounts (MSA). However,
MSAs have always been restricted to employees of small businesses
and the self-employed. HSAs are open to just about anyone with
a High-Deductible Health Plan (at least $1,100 for individuals
and $2,200 for families).
- HSAs are portable and move with you if you change employment.
- HSA contributions can come from you, your employer, or both
- all in the same tax year.
- Contributions by an individual are tax deductible.
- Employer contributions are not included in the individual's
taxable income.
- Unused contributions roll over from year to year and interest
continues to grow on a tax-deferred basis.
- HSA funds can be used to cover health insurance deductibles
and any co-payments for qualified medical services.
- "Catch-Up" Contributions - Individuals age
55 or older may contribute an extra $500 per year to an HSA in 2004. This
provision increases $100 each year up to 2009, when the contribution
can be $1,000.
- HSA funds can be used to purchase over-the-counter drugs and
to pay health insurance premiums during any period of unemployment.
- HSAs may be offered under an employer's cafeteria plan, allowing
employees to contribute to an HSA with pre-tax salary reductions.
- Any interest earned by the account is not taxable while in the
HSA. Withdrawals for qualified medical expenses are not taxable.
- Funds can be used for non-qualified purposes but are subject
to taxes and a 10% penalty.
- Once you reach age 65, you can withdraw the money for non-medical
reasons without the 10% penalty.
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