Health Savings Accounts
What
is a Health Savings Account (HSA)?
Who is eligible for an HSA?
What is a High Deductible Health
Plan (HDHP)?
What are "qualified
medical expenses?"
If
I don’t have
health insurance, can I open an HSA?
I have a high income, can I open
an HSA?
Does the High Deductible Health
Plan need to be in my name to open an HSA?
Are there any setup fees or monthly maintenance
fees for an HSA?
Do HSA contributions have to be made in
equal amounts each month?
Can I rollover an existing
HSA from another institution to a Virginia Credit Union HSA?
How can I access funds from my HSA?
When can I make withdrawals from an HSA?
How can I make contributions to my HSA?
Will my HSA be available in
Home Banking?
Are there any limitations
on the number of withdrawals I can make from my HSA?
Are there any forms I need to file to
be reimbursed for medical expenses?
How do I keep track of my HSA expenses?
How can I check
the balance of my HSA?
What happens if I contribute too much
to my HSA, and exceed my High Deductible Health Plan deductible?
What happens if I don't spend all the HSA
funds by the end of the year?
Are there any forms that I need to use
in preparing my taxes at year-end?
What happens if I'm no longer participating
in a High Deductible Health Plan?
What happens to my HSA funds when I reach
age 65?
What happens to my HSA when I die?
What
is a Health Savings Account (HSA)?
A Health Savings Account is an individually owned, tax-favored savings
account for health care expenses that works in conjunction with a High
Deductible Health Plan. HSAs let you pay for current health
expenses and save tax free for future qualified medical expenses.
Who is eligible for an HSA?
Individuals
must be covered by a High
Deductible Health Plan to be able
to take advantage of an HSA. By
law,
you cannot be covered
by another
health plan, unless that plan is another High
Deductible Health Plan or
one that provides specific coverage such as dental or vision.
Additionally,
to qualify for an HSA, you must not be enrolled in Medicare,
or be claimed as a dependent on another person's tax return.
What is a High Deductible Health
Plan (HDHP)?
For 2007, a High Deductible Health Plan is defined as follows:
- For individual coverage, it has a
minimum deductible of $1,100 a year and an annual maximum
out-of-pocket expense (including deductibles and co-pays) of
$5,500
- For family coverage, it has a minimum
deductible of
$2,220
a year and an annual maximum out-of-pocket expense (including
deductibles and co-pays) of $11,000
For 2008, a High Deductible Health Plan is defined as follows:
- For individual coverage, it has a
minimum deductible of $1,100 a year and an annual maximum
out-of-pocket expense (including deductibles and co-pays) of
$5,600
- For family coverage, it has a minimum
deductible of
$2,220
a year and an annual maximum out-of-pocket expense (including
deductibles and co-pays) of $11,200
These limitations
are
subject to annual
cost of living adjustments.
What
are "qualified medical expenses?"
Your HSA can be used to pay for medical
expenses that apply toward your deductible and qualified medical expenses
that your health plan doesn't cover. (A complete list of qualified
medical expenses
is available in IRS
Publication 502.)
If I
don’t have health insurance,
can I open an HSA?
You can only establish or contribute to an HSA if you are covered
by a High Deductible Health Plan.
I have a high income, can I open an
HSA?
Yes you can. There are no income limits on HSAs.
Does the High
Deductible Health Plan policy have to be in
my name to open an HSA?
No, the policy does not have to be in your name. As long as you are
covered by a High
Deductible Health Plan policy and meet the
other eligibility requirements, you can open an HSA. You can still
be eligible for an HSA even if the policy is in your spouse's name.
Are there any setup fees or monthly maintenance
fees for an HSA?
Virginia Credit Union does
not charge any monthly maintenance fees. There is a $10 annual fee and $5
is required to open your account.
Do HSA contributions have to be made in equal amounts
each month?
No, they don't. You can contribute in any amounts or frequency up
to the maximum allowable contribution.
Can I roll over an
existing HSA from another institution to a VACU HSA?
Yes, you can roll over funds from other HSAs. Rollovers
are not subject to the annual contribution limits. You must roll over
the amount within 60 days after the date of receipt. You can make only
one rollover contribution to an HSA during a one year period. Please
contact us for additional information
and the necessary form.
How can I access
funds in my HSA?
You can access funds from your HSA savings account
by visiting any branch, calling
Member Services, calling QuikLine
Phone Banking, or using Internet
Home Banking.
The funds
in your HSA savings account will be linked to
the HSA checking account. When checks are written,
funds will be automatically transferred from the HSA savings
account to cover the amount of the check as it is processed. This
HSA checking account will not allow for any deposits
and overdraft protection is not available for it. The HSA checking
account is available through Home
Banking and QuikLine
Phone Banking only for viewing account history.
When can I make withdrawals from an
HSA?
An individual may make withdrawals from an HSA at any time,
within Federal Regulation D limitations.
How can I make contributions to my HSA?
You can make contributions to your HSA savings account through direct
deposit, payroll
deduction, at any branch,
by calling
Member Services,
calling
QuikLine
phone
banking, or using Internet Home
Banking. Contributions cannot be made directly to your HSA
checking account.
Will my HSA be available on Home Banking?
Yes, your HSA will be visible on Home Banking as two accounts— savings
and checking. Your HSA savings account will be available for transactions and
your
HSA checking account will be available only for viewing account history.
TIP: Rename your HSA accounts in Home
Banking so you don't
confuse them with other savings
or checking accounts.
Are
there any limitations on the number of withdrawals I can make
from my HSA?
Your HSA is a savings account and subject to withdrawal limitations
under Federal Regulation
D.
Are there any forms I need to file to
be reimbursed for medical expenses?
No, there are no reimbursement forms. You can pay for medical expenses by writing
a check.
How do I keep track of my HSA expenses?
HSAs will be included on your monthly statement, which will summarize
your account contributions and disbursements. To help with year-end
tax preparation, Virginia Credit Union
annually sends required forms to
you and the IRS. You should keep sufficient records of your
expenditures, such as payment receipts.
How can I check
the balance of my HSA?
You can check the balance of your HSA online through Home
Banking, or by calling 24-hour QuikLline
phone banking or Member Services.
What happens if I contribute too much
to my HSA, and exceed my High Deductible Health Plan deductible?
The IRS imposes a penalty on excess contributions, but under certain circumstances
allows for corrective distributions to be made. You would also be required to
pay tax on the dividends earned on those excess funds.
What happens if I don't spend all the HSA
funds by the end of the year?
Unused funds roll over from year to year.
Are there any forms that I need to use
in preparing my taxes at year-end?
Like an IRA, by May 31 you will
be sent Form 5498-SA showing the amount contributed to your HSA during
the year. Any employer’s contributions also will also be shown
on this form. In addition, Form 1099-SA sent in January will report
any distributions made on your HSA.
You must report all contributions and distributions
on Form 8889 and file it with your Form 1040 at annual tax time.
If you have tax questions, consult your tax advisor or visit the Internal
Revenue Service web site.
What happens if I'm no longer participating
in a High Deductible Health Plan?
You can continue to spend any funds in your HSA to pay for qualified
medical expenses. However, you can no longer contribute to your HSA.
What happens to my HSA funds when I reach
age 65?
Once you turn 65, you can continue to use your account tax-free for out-of-pocket
health expenses. If you enroll in Medicare, you may use your account to pay Medicare
premiums, deductibles, co-pays, and coinsurance under any part of Medicare. Contributions
must stop once an individual is enrolled in Medicare. If
you have retiree benefits through your former employer, you can also use your
account to pay for your share of retiree medical insurance premiums.
At age 65 you may also use your account funds to pay for non-medical expenses.
If
used for non-medical expenses, the amount withdrawn will be taxable as income
but
will not be subject to any other penalties.
What happens to my HSA when I die?
If you are married, your spouse becomes the owner of the account
and can use it as if it were their own HSA. If you are not married,
the account will no longer be treated as an HSA upon your death.
The account will pass to your beneficiary or become part of your
estate (and be subject to any applicable taxes).
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