Health Savings Account (HSA)
A Health Savings Account (HSA) can only be offered in conjunction with an High Deductible Health Plan (HDHP). The HSA provides the employee security and protection against high or unexpected medical bills and the flexibility to set aside money for current and future healthcare costs through investment earnings. Employees “own” the funds in the account, which remain in the account from year to year, just like an IRA. There is no “use it or lose” rule for HSAs.
High Deductible Health Plan (HDHP)
An HDHP is a health insurance plan with
- A minimum annual deductible of $1,050 for individuals and $2,100 for families. The deductible is fully integrated to include medical and pharmacy expenses.
- An out-of-pocket expense limit of no more than $5,250 for individuals and $10,500 for families
- Preventive Care costs are paid at 100%
- No co-pays for doctor, hospital, or ER visits
Exceptions: preventive services such as routine and annual exams, immunizations, screening tests, routine prenatal and well-child care will be paid at 100% before you have met the deductible.
The advantages of an HSA:
- Higher deductibles mean lower premiums
- High dollar claim protection for employees
- Preventive Care is covered at 100% without having to meet the deductible
- Employees can save for medical expenses or for retirement
- Funds carry over year to year and earn tax-free interest
- Portability – funds may be taken with the employee should they become unemployed, moved, change medical coverage, or change marital status
Example:
| SINGLE COVERAGE |
| |
ACCOUNT BALANCE |
| 2006 HSA Allocation |
$1,500 |
| |
| Preventive Care (No out of pocket for members) |
$250 |
| |
| Non-Preventive Care |
|
| Physician Visits (4) |
$350 |
| Prescriptions (12) |
$480 |
| Eyeglasses/Contact lenses |
$300 |
| Total: |
$1,130 |
| |
| Preventive Care Charges |
$250 |
| HSA Reimbursed Charges |
$1,130 |
| |
| Carryover for 2007 |
$370** |
**Unlike FSA (Flexible Spending Account) funds, any dollars left in your HSA account at the end of the year “roll over” to the next year. There is no “use it or lose it” feature with the Health Savings Account. |
HSA Brochure (PDF)
Frequently Asked Questions
Who is eligible to contribute to an HSA?
Employees who are covered by a High Deductible Health Plan and: are not covered by other insurance, enrolled in Medicare, and cannot be claimed as a dependent on someone else’s tax return.
How much money can be contributed to the HSA?
For 2006, the annual maximum contribution for single coverage is $2,700 and $5,450 for family or 100% of the deductible, whichever is less.
How are HSA funds accessed?
Employees may use their issued HSA debit card or withdrawal form.
How are HSA funds tracked?
HealthSCOPE Benefits is partnered with US Bank to provide user-friendly web tools to track activity and monitor account growth.
Which doctors can employees see?
The HDHP/HSA includes coverage for all eligible healthcare providers but it is suggested employees use a participating provider in order to make best use of their healthcare funds.
What about prescription drug coverage?
Employees will receive discounts on prescription drugs purchased at participating pharmacies. Their payment is applied to the medical deductible.
