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HSA

If you elect to participate in the High-Deductible Health Plan, you can open a personal Health Savings Account (HSA).

An HSA is a personal account that you can open on your own—through any bank, financial institution or investment firm you choose—and fund each year using tax-favored contributions. You can then use your HSA to pay the cost of eligible health care expenses… and pay no taxes on this money as it comes out of your HSA.

You may participate in an HSA only if you elect coverage under the HDHP coverage option.

If you are thinking about participating in a Health Savings Account, here are five things you should know:

Setting Up Your HSA. You may set up your personal Health Savings Account with your choice of any bank, financial institution or investment firm that is registered to offer this type of account.
Funding Your HSA. You can make contributions to your HSA throughout the year or in a single lump sum up to the annual deductibles under the HDHP—$2,000 if you elect single coverage, or $4,000 if you elect associate + 1 or family coverage. You can then use your HSA to pay the cost of eligible health care expenses… and pay no taxes on this money as it comes out of your HSA. So these dollars remain tax free!
HSA Investment and Growth. You can invest your account in any way provided through the bank, financial institution or investment firm that you choose to set up your account. Investment options (and applicable fees) will vary from one manager to another. Any earnings on your account will be tax free as long as you use them to pay qualified medical expenses.
Annual Carryover. You can carry over any money left in your HSA at the end of one year to your HSA for the next year. (So you won’t forfeit unused dollars at the end of the year as you would under the “use it or lose it” requirement of a flexible spending account.)
Accumulating Value. With its investment growth and annual carryover features, you can use an HSA to accumulate funds today that you may need to pay medical expenses in the future... even after you retire.

For another source of information about HSAs, see the highlights brochure.

To set up an HSA, you will need to find a bank, financial institution or investment firm that is registered to offer this type of arrangement. You might start by talking with a representative from your local bank, or check out the government-sponsored HSA Web site at www.irs.hsa.gov. In any case, you should carefully evaluate the services and related fees of any bank, financial institution or investment firm you consider.

Note: If you open an HSA, you also can participate in a Health Care Flexible Spending Account (FSA). You will be able to use your HSA to reimburse yourself for any out-of-pocket expenses for services that are covered under the HDHP and your Health Care FSA to reimburse yourself for any out-of-pocket expenses that are not covered expenses under the HDHP (such as vision care, orthodontia and certain over-the-counter medications).