Health Savings Accounts are saving accounts used to pay for unreimbursed health care expenses. These accounts can accumulate tax-deferred interest similar to individual retirement accounts (IRAs). Health Savings Accounts (HSAs) were created by the Medicare bill signed by President Bush on December 8, 2003 and are designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis.
HSAs are used in conjunction with a High Deductible Health Plan (HDHP). An HSA is available to anyone who is :
- covered by an HDHP
- is not covered by other health insurance
- is not enrolled in Medicare
- can't be claimed as a dependent on someone else's tax return.
- children cannot establish their own HSAs
- Spoused can establish their own HSAs if they are eligible
Although other health insurance can make an individual ineligible for an HSA, there are insurance types that do NOT interfer with eligibility for an HSA. These are:
- Specific desease or illness insurance and accident, disability, dental care, vision care and long-term care insurance
- Employee Assistance Programs or disease management program or wellness program
- Drug discount cards
- Eligibility for VA Benefits
There are no income limits on who may contribute to an HSA and no requirement that contributions be earned income, meaning that anyone may contribute to the account on behalf of the HSA holder.
HSAs have seen dramatic growth in the last 6 years. In 2004 there were approximately 438,000 individuals covered with HSA type insurance plans. By 2005 there were 3.2 million individuals covered according to AHIP. Relevant to today's health care debate, of the increase, 31% were previously uninsured individuals buying health insurance on their own. This number has continuted to climb since the last time these numbers were available. Projections are that 14 million Americans are now covered by an HSA plan.
You can learn more by clicking on the link Flexible Benefit Plans or by calling 704-341-5981
