(HSA) Health Savings Account
Questions and Answers

 

General information about HSAs
Health Savings Accounts (HSAs) were signed by the President on December 8, 2003. Assurant Health, a national leader in Medical Savings Accounts (MSAs), has fully supported HSAs and was at the forefront of the legislation. HSAs are a significant expansion of the current MSAs.

 

What is a Health Savings Account?
An HSA works like an IRA, except that money is used to pay health care costs. Participants enroll in a relatively inexpensive high deductible insurance plan. Then, a tax-deductible savings account may be opened to cover current and future medical expenses. The money deposited, as well as the earnings, is tax-deferred. The money can then be withdrawn to cover qualified medical expenses tax-free. Unused balances roll over from year to year.

Who can qualify?
Anyone with a qualified high deductible insurance plan will be eligible for a tax-deductible HSA.

Who can contribute to an HSA?
Individuals, employers and their employees. There are no restrictions.

How much can be contributed to the HSA?

What can HSA funds be used for?
The funds belong to the individual or employee. Funds can be withdrawn for any purpose, however, if not withdrawn for qualified medical expenses by someone under age 65, the amount withdrawn is taxable and subject to a 10% penalty by the IRS. After age 65, there is no penalty for non-qualified withdrawals but amounts are taxable.

Funds used to pay for the following are tax-free and penalty-free:

  • Qualified medical expenses as defined under Section 213 of the IRS Code. This is the same code section that governs MSAs.
  • COBRA insurance.
  • Qualified long-term care insurance and expenses.
  • Health insurance premiums for individuals receiving unemployment compensation.
  • Medicare and retiree health insurance premiums, but not Medicare Supplement premiums.

Is an HSA allowed for those small business owners who are not eligible for an HRA?
Yes.

What is the difference between a Medical Savings Account and a Health Savings Account?
HSAs are a significant expansion of the MSA program. Unlike MSAs, HSAs provide the following:

Everyone with a qualified high deductible plan is eligible to participate (includes all size employers, the self-employed, individual and families who are not self-employed). HSAs can be funded by the employer, employee or combination of both within the same calendar year. HSAs are permanent and portable. HSAs allow for larger tax-deferred contributions to custodial accounts. There are broader deductible ranges.

What is a high deductible insurance plan?
For 2008, a high deductible insurance plan is defined as a health plan with a minimum deductible of $1100 for self-only coverage and $2,200 for family coverage. The maximum out-of-pocket expenses for allowed costs must be no more than $5,800 for self-only coverage and no more than $11,200 for family.

When will Assurant Health start offering HSAs?
Health Savings Accounts have been available since January 1, 2004.

Will the MSA continue to be available? What about existing MSA accounts?
MSAs are scheduled to end December 31, 2003. Existing accounts can either be “grandfathered” or they can move to an HSA. Information on moving from an existing MSA to an HSA will be forthcoming.

 

Medical Expense Example List (PDF)
Application - Disclosure Statement (PDF)
Marketing Brochure (PDF)

 

For more information, Contact us by E-mail...

 

 

msa medical savings account

321 Merchant Street
Ambridge, PA 15003 		  724 - 266-0301 Phone
724 - 266-8677 Fax

 

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