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Q. Am I eligible for an HSA?
A. To qualify for an HSA, you must be covered by a High-Deductible Health Plan (HDHP). You also need to be at least 18 years old. You are ineligible for an HSA if you are covered by any health insurance plan other than an HDHP, are enrolled in Medicare Part A or B, or are claimed as a dependent on another person's tax return. |
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Q. Are there HSA income limits?
A. There are no income limits to qualify for an HSA, and your contributions do not need to come from employment earnings. You can make deposits from personal savings, dividends, and unemployment or welfare benefits. |
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Q. What is a High-Deductible Health Plan (HDHP)?
A. An HDHP is a type of health insurance that has lower monthly fees and higher annual deductibles than traditional health plans (a minimum of $1,200 for self and $2,400 for family coverage). Choosing an HDHP can reduce the amount you pay in premiums each year, and increase take-home pay.
Annual out-of-pocket costs (including deductibles and copays) cannot exceed $5,950 for self coverage and $11,900 for a family plan. |
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Q. How do I get an HDHP?
A. Any company that sells health insurance coverage in your state may offer a high deductible health plan policy. Contact your employer's human resource department, your current insurance company, a licensed insurance agent or your state insurance department.
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Q. What expenses can I cover with my HSA?
A. Most medical, dental and vision care, as well as prescription drugs are eligible for tax-free payment from your HSA. These expenses must be incurred by you, your spouse or dependents. Alternative treatments, such as acupuncture and chiropractic care, may also qualify. Examples of ineligible expenses are cosmetic surgery, weight-loss programs and athletic club memberships.
For a more complete list of acceptable expenses, see
to join
IRS Form 502 (pdf) |
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Q. What happens if I use my HSA for ineligible expenses?
A. The withdrawal will be subject to regular income tax (if you're under 65), and may be subject to an IRS tax penalty. |
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Q. How much can I contribute to my HSA per year?
A. For 2010, the maximum contribution for an eligible individual with self-only coverage is $3,050, and the maximum contribution for an eligible individual with family coverage is $6,150. |
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Q. Can I make "catch-up" contributions at age 55?
A. If you're 55 or older at any time during the calendar year, you can deposit additional funds to help your account "catch up" before retirement. The maximum annual catch-up contributions are:
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Q. Can my employer contribute to my HSA?
A. Yes, contributions can be made by both you and your employer. Just keep in mind that all deposits count towards the maximum annual contribution. |
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Q. Are HSA contributions tax-deductible?
A. Money you deposit in your HSA qualifies for an "above-the-line" deduction. If a relative or friend makes a gift contribution to your HSA, you still receive the tax deduction. However, you do not get tax breaks on the contributions your employer makes. |
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Q. Can I make pre-tax contributions through my employer?
A. If your employer provides a salary reduction plan (also called a "Section 125" or "cafeteria" plan), you can make contributions to your HSA on a pre-tax basis. Once you claim this tax advantage, you can no longer take the "above-the-line" deduction. |
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Q. Does the money in my HSA earn interest?
A. Yes. We pay competitive interest rates on the account. It is FDIC-insured and earnings are tax-free when used to pay for medically eligible expenses. |
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Q. Can my spouse be on my account?
A. Yes. The HSA can only be established as an individual account but you can assign your spouse to be a Power of Attorney on the account. However, you can use funds from your HSA to cover eligible medical expenses for your spouse and/or dependents.
For maximum savings potential, both you and your spouse should have an HSA. This way, each of you can make catch-up contributions when you turn 55. |
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Q. Can I open an HSA for my child?
A. If your child can be considered a dependent on someone's tax return, they are not eligible to have an HSA. However, if they are not on anyone's tax return as a dependent, they may open an HSA and you can fund it for them. Please note, the tax advantages will be your child's, not yours. |
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Q. Can a spouse or dependent access my account?
A. Yes. You first need to grant your spouse or dependent Power of Attorney (see below). |
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Q. What is Power of Attorney?
A. This is a legal document that gives another person the authority to act on your behalf. Power of Attorney is frequently used in the event of illness or disability, when the grantor is unable to attend to legal or financial affairs. |
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Q. Does my HSA roll over each year?
A. Yes. The money in your HSA is always yours to keep, with no "use it or lose it" rules. Funds are allowed to grow year after year, with no maximum cap. |
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Q. What happens to my HSA when I turn 65?
A. You can continue to use the account tax-free for eligible out-of-pocket expenses. When your Medicare coverage takes effect, your HSA can take care of Medicare premiums, deductibles and copays. At this age, you can also use HSA funds for non-medical reasons. The amount withdrawn will be taxable as income, but is not subject to penalties. |
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Q. What happens to my HSA when I die?
A. If you are married and your spouse is a named beneficiary, s/he becomes the owner of the account and assumes it as his/her own HSA. If you are unmarried, your account will cease to be an HSA. It will pass to beneficiaries or become a part of your estate, and be subject to applicable taxes. |
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Q. What if I lose my HDHP coverage?
A. You can continue to pay for qualified medical expenses without having to pay tax or penalties. However, you won't be able to make any more contributions to the account. There is no time limit on using the funds. They will remain in your HSA until you need them. |
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Did we answer all of your questions? If not, please contact us at 800-US BANKS. |
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