Health Savings Account
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HSA Q&A | HSA CHECKING

HSA Accounts

A Health Savings Account (HSA) is an alternative to traditional health insurance. The HSA was designed to help individuals/families defer the out of pocket expenses when they are covered by a High Deductible Health Plan (HDHP). An HDHP is defined has having a higher annual deductible than typical health plans, and a maximum limit on the sum of the annual deductible and out-of-pocket expenses. Out-of-pocket expenses include co-payments and other amounts, but do not include premiums. HSA accounts offer tax benefits for contributions and distribution, when used for qualified expenses.

Eligibility

In order to qualify for this type of account there are requirements that have been set by the Internal Revenue Service. A customer must meet all four of the follow qualifications:
  • Have a high deductible health plan on the first day of the month
  • Have no other health coverage
  • Not enrolled in Medicare
  • Cannot be claimed as a dependent on someone else’s tax return
Benefits

HSAs receive tax benefits, such as contributions, whether completed by you or your employer. This turn lowers your taxable income and distribution used for qualifying expenses and is tax free.

Because you and your employer can both make contributions to your HSA it is imperative to remember your contribution limit in order to avoid penalties for having an ‘excess contribution’.

Contribution Limits

2009 HSA Contribution limits¹ are as follows:

Standard Limits²
Self-only $3,000                                    Family $5,950

Catch-up Contribution amount³ $1,000 (Catch-up contribution are offered to those that are age 55 or older)

¹May be reduced by smaller HDHP deductibles, partial year eligibility, and special rules for married couples.
²Subject to cost-of-living adjustments (COLAs).
³Catch-up contribution increases $100 per year though 2009

The contribution limit is reduced by:
  • A smaller HDHP deductible
  • Partial-year eligibility, due to age or HDHP coverage
  • Archer MSA Contributions and
  • Special rules for married couples
  • HDHP Deductible Reduction: Contribution limits are the lesser of the HDHP deductible or the standard limit.
  • Partial-year Eligibility Reduction: The standard and catch-up contribution amounts are determined on a monthly basis, on the first day of each month, and are reduced to zero for any months an individual is not covered by an HDHP or is enrolled in Medicare.
  • Archer MSA Contribution Reduction: The HSA regular contribution limit is reduced by aggregated contributions made to an Archer MSA for the same year.
  • Special Rules for Married Couples Reduction: When married, and each spouse is an eligible individual under separate HDHP’s and both have family coverage, the rules treat both spouses as covered under the plan with the lowest deductible amount, divided equally between the spouses, unless they agree on a different division. However, this division flexibility does not apply to any period during which only one spouse is an eligible individual nor does it apply to the catch-up contribution amount. If both spouses are eligible individuals and one spouse has a family coverage while the other spouse has self-only coverage, the contribution limit is determined using the family plan deductible.
Note: contributions limits are set by IRS and are subject to change.

Financial Institution's Responsibility

As the trustee of the HSAs our responsibilities are much like that of the Individual Retirement Accounts. Oklahoma Fidelity Bank is not responsible for determining an HSA owner’s eligibility, nor is it responsible for determining whether an HSA owner’s distribution is for a qualified medical expense.

Owner’s Responsibility

An HSA owner, with the assistance of his insurance company and tax/legal professional, are responsible for making all determinations relating to this type of account.

Ownerships

HSAs are individual accounts and may not be jointly owned. However, you are permitted to have an authorized signer, such as your spouse. Just like any account you may designate a beneficiary and the account transfers to the beneficiary. If the beneficiary is your spouse, the ownership automatically transfers to the spouse. If you name someone other than your spouse, the account ceases to be an HSA (an authorized signer's rights cease upon the owners death and does not transfer to their ownership).