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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.

 

 


What is a Health Savings Account?

How do Health Savings Accounts Work?

Why Choose an HSA?

HSAs vs. other plans

Tax Savings