HSA Plan Design

Fast Facts About Health Savings Accounts (HSA)

HSAs are similar to Archer 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 $1,200 for individuals and $2,400 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.
Individuals age 55 or older may make Catch-Up Contributions as much as an extra $1000 per year to an HSA as of 2009.
HSA funds can be used to purchase over-the-counter drugs and to pay health insurance premiums during any period of unemployment. You may only use your HSA Funds to pay for OTC if you have doctor's prescription.
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 20% penalty.
Once you reach age 65, you can withdraw the money for non-medical reasons without the 20% penalty.