Healthcare Savings Account

With the passage of the Medicare bill in December 2003, questions about the healthcare savings account (HSA) have been asked. Here is a list of some of the most commonly asked questions about healthcare savings account and their answers:

1. Who can qualify for a healthcare savings account?

Age restrictions in a healthcare savings account are generally lax. Anyone who is under the age of 65 and has a qualified high-deductible policy is eligible for an HSA plan. If you do not have a qualified high-deductible plan, the healthcare savings account cannot provide you coverage. However, you may still be covered if you purchased other disability, vision, dental and long-term care policies.

2. How much can you contribute to a healthcare savings account in a given year?

The amount of the deductible is often the basis for computing how much you can contribute to your healthcare savings account. That is, the amount could be up to $2,700 for singles and $5,450 for families per year. However, if you are 55 years old or older, you are generally allowed to put in an extra $700 to your HSA.

3. What high-deductible health insurance policies can qualify for a healthcare savings account?

Generally, any high-deductible health policy can qualify for an HSA. However, they must also meet certain requirements imposed by the IRS. Thus, the amount deductible must be at least $1,050 for singles and $2,100 for families. The annual out-of-pocket must also be for an amount not exceeding $5,250 for singles and $10,500 for families. This does not include the premiums, but includes the co-payments. Therefore, you can also apply for a healthcare savings account if your employer has enrolled you under a qualified high-deductible insurance policy.

4. Where can you open a healthcare savings account?

Depending on whether you are getting coverage on your own or through your employer, there are generally two places where you can open a healthcare savings account.

If you are on your own, the first thing to do is to look for companies that offer qualified high-deductible healthcare plans. Sites, such as HSAInsider.com and HSADecisions.org, offer a list of insurance companies in your state. Compare rates and features to decide which policy is best for your needs.

If your employer has provided you with heath insurance, you may already have an HSA-eligible insurance option available. If not, then talk with your benefits manager and see if they include healthcare savings accounts on your health insurance menu. The good thing about getting an HSA through your employer is that it can really cut down your share of the premiums, if your employer does not fund all of the premiums already. In fact, some employers may even add a 401(k) style match to your existing HSA.