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How Health Savings Accounts (HSA’s) Will:Save You 40% to 50% On Your Health Insurance

Make Your Medical Expenses Tax DeductibleCut Your Taxes By Up To $1850 Or More

How Health Savings Accounts Work

Health Savings Accounts (HSAs) are simple and easy to understand.

A Health Savings Account is a tax-favored savings account combined with a qualifying high-deductible health insurance plan.  By allowing you to deposit tax-deductible funds into an account that you can use to cover medical costs, HSAs enable you to take control of your own health care decisions.

First you must have a high-deductible health insurance plan that qualifies to be partnered with an HSA.  These plans are available through various insurance companies, depending in what part of the country you live.  The plans are all similar in the fact that they have deductibles between $1,200 and $5,950 for singles, and between $2,400 and $11,900 for families.

Once your insurance policy has become effective, you may fund your HSA account.

Tax-subsidized Medical Expenses

Even though you have received a tax deduction by putting your money into this account, the money is still yours to spend tax free, as long as you spend it on qualified medical expenses.  Since you have a high-deductible plan, this would of course include any expenses you incur from going to the doctor, purchasing prescription drugs, or paying other expenses toward your deductible.  Once your deductible is met, the health insurance covers your medical expenses as defined in the policy.

In addition to being able to withdraw your money tax free to cover these types of expenses (which might otherwise be covered by a traditional low-deductible high-premium policy), you can use your HSA account to cover other costs that would not normally be covered by a health insurance policy.

U.S. Treasury DepartmentWashington, DC

Who Is Eligible for HSAs?Any individual that:

– Is covered by an HDHP

– Is not covered by other health insurance

– Is not enrolled in Medicare

– Can’t be claimed as a dependent on someone else’s tax return Children cannot establish their own HSAs

No income limits on who may contribute to an HSA

No requirement of having earned income to contribute to an HSA Revised August 18, 2004 4

HSA AccountsNo “use it or lose it rules” like Flexible Spending Arrangements (FSAs)

– All amounts in the HSA are fully vested– Unspent balances in accounts remain in the account until spent– Encourages account holders to spend their funds more wisely on their medical care– Encourages account holders to shop around for the best value for their health care dollars

Accounts can grow through investment earnings, just like an IRA

– Same investment options and investment limitations as IRAs – Same restrictions on self-dealing as with IRAs

U.S. Treasury DepartmentWashington, DC

Who Is Eligible for HSAs?

What other health coverage is allowed for you to still be eligible for an HSA?

- Disease or illness insurance and accident, disability, dental care, vision care and long-term care insurance

- Employee Assistance Programs, disease management program or wellness program –These programs must not provide significant benefits in the nature of medical care or treatment

- Drug discount cards

- Eligibility for VA Benefits –Unless you have actually received VA health benefits in the last 3 months

Revised August 18, 2004

U.S. Treasury DepartmentWashington, DC

Who Is Eligible for HSAs?

What “1st dollar” medical benefits make someone ineligible for an HSA?

–Medicare

–Tricare Coverage

–Flexible Spending Arrangements

–Health Reimbursement Arrangements

There are permitted HSA/HRA/FSA combinations

Revised August 18, 2004 6

U.S. Treasury DepartmentWashington, DC

Who Is Eligible for HSAs?

Permitted HSA/HRA/FSA combinations:

–“Limited purpose” FSAs and HRAs that restrict reimbursements to certain permitted benefits such as vision, dental, or preventive care benefits

–“Post-deductible” FSAs or HRAs that only provide reimbursement after the minimum annual deductible has been satisfied under the HDHP

–“Retirement” HRAs that only provide reimbursement after an employee retires

–“Suspended” HRAs where the employee has elected to forgo health reimbursements for the coverage period

U.S. Treasury DepartmentWashington, DC

Treasury AssistanceWeb sitewww.treas.gov

(Click on “Health Savings Account HSA”)

Contains all Treasury guidance

Contains Model HSA trustee and custodian forms

E-mail address HSAInfo@do.treas.gov

•Voice mailbox–(202) 622-4HSA

U.S. Treasury DepartmentWashington, DC

High Deductible HSA-Qualified Health insurance Plans (HDHPs), also known as HSA Insurance Plans, that can be paired with a Health Savings Account (HSA) are currently available through many insurance companies.

“More employers are adding high-deductible plans to the mix of health plans they offer or using them to replace their traditional plans. In 2009, about 12 percent of employers offered workers a consumer-driven health plan, and many more said they plan to do so, according to an Employee Benefit Research Institute analysis. Bigger companies were most likely to offer them: More than 40 percent of companies with more than 10,000 workers did so. But the plans also have fans among small-business owners because of their lower costs.”

High-deductible health-insurance plans grow more attractive to employers

“Plans with high deductibles -- ones that have annual deductibles of at least $1,200 for individuals or $2,400 for families if they're linked to an HSA, for example -- are a key element in "consumer-driven health care," an approach based on the idea that people will make smarter, less wasteful health-care decisions if they have a bigger financial stake in their own care. The plans started going mainstream after a 2003 law created HSAs that link to some high-deductible plans. The accounts allow people to put money aside tax-free to cover deductibles and other medical expenses. Employers and employees alike can contribute to the accounts, but the money belongs to the workers, who can take it with them if they leave their jobs. (Money deposited in a flexible spending account, in contrast, disappears at year's end if it's not used.)”

“The plans are likely to become more popular with time. "As costs rise, it makes the high-deductible plan more attractive, because it's one way to keep premiums down," says Paul Fronstin, director of EBRI's health research and education program.”

By Michelle AndrewsTuesday, June 22, 2010

• Blue Cross Blue Shield is one of the most widely known and trusted names in the health insurance industry.  Blue Cross Blue Shield of UT has one of the most competitive HSA plans in the state of Utah.

• Humana offers an excellent value on HSA plans in many areas.  It is often the most attractively priced plan for large families or someone looking for a higher deductible.  In addition to hospitalization, this plan also provides coverage for doctor visits and prescription drugs, which is something many of the lowest priced HSA plans don't do.

• Time One Deductible HSA plans offer the nation's most popular HSA plans.  Time Insurance, formerly known as Fortis Health, is an Assurant Health member company.

Utah HSA Insurance PlansIn Utah, you’ll find a large number of companies offering many great HSA-qualified health insurance plans.  The most popular HSA plans in Utah are the Humana, Blue Cross Blue Shield and Time Insurance (Fortis Health and Assurant Health) plans

Arizona HSA Insurance Plans

• Humana offers an excellent value on HSA plans in many areas.  It is often the most attractively priced plan for large families or someone looking for a higher deductible.  In addition to hospitalization, this plan also provides coverage for doctor visits and prescription drugs, which is something many of the lowest priced HSA plans don't do.

• Time One Deductible HSA plans offer the nation's most popular HSA plans.  Time Insurance, formerly known as Fortis Health, is an Assurant Health member company.

• United Healthcare / Golden Rule offers HSA plans designed for individuals and families willing to take additional responsibility for routine health care expenses.  In most parts of the country, Golden Rule uses the United Healthcare PPO network, one of the nation's largest and most respected networks.  In the areas in which Golden Rule utilizes the United Healthcare network, their rates are especially competitive.

• Aetna is known nationwide as a leader in the health insurance industry.

• Blue Cross Blue Shield is one of the most widely known and trusted names in the health insurance industry.  Blue Cross Blue Shield has one of the most competitive HSA plans in the state of Arizona.

• Cigna Health Insurance has been helping people in AZ lead healthier, more secure lives for more than 125 years. CIGNA offers affordably priced coverage for both HSA and non-HSA coverage in Arizona.

In Arizona, you’ll find a large number of companies offering many great HSA-qualified health insurance plans.  The most popular HSA plans in AZ are the SaveRight HSA plan from Time Insurance Company, the HSA Saver and HSA 100 plans from United Healthcare.  However, rates vary based on age and zip code, so we suggest you look carefully at all your options. 

 - Nursing Services - board and Social Security    paid by taxpayers - Obstetrical Expenses   - Operations - legal - Optometrists   - Orthodontia - Orthopedic Shoes - excess costs - Oxygen / Oxygen Equipment   - Prosthesis   - Psychiatric Care - Psychologists - Psychotherapists - Reclining Chair - for cardiac patients - Remedial Reading   - Retarded Person- costs for special home. - Retirement Home - lifetime medical care  - Sanitarium Rest Home - medical, educational,    rehabilitative services - Schools - special, relief, or handicapped - Sexual Dysfunction Treatment   - Sterilization - Surgical Fees - Swimming Pool - treatment of polio or arthritis - Teeth - artificial - Television - closed-caption decoder - Therapy Treatments - prescribed by a physician - Transportation - essentially and primarily for    medical care - Weight Loss Programs - as a treatment for the    disease of obesity - Wheelchair or Autoette   - X-rays - Mileage   - Stop smoking programs   - Vasectomy   - Vision correction   - Stop-smoking programs* Note: Over-the-counter drugs will no longer be considered qualified expenses after January 1,

2011

- Healing Services Fee    - Health Maintenance Organization - Hearing Aids   - Hospital Care   - Insulin   - Laboratory Fees - Laetrile - by prescription - Lead Paint Removal   - Lazer eye surgery   - Lodging (treatment related, and with restrictions,    up to $50 per person)   - Medical conference fees (relating to chronic    illness; no lodging or meals)   - Medicare Parts A and B   - Legal Expenses - authorizing treatment of mental illness  - Lifetime Medical Care - prepaid; retirement    home  - Limbs - artificial   - Mattress - prescribed for alleviation of arthritis - Membership Fees - medical services, hospitalization, and clinical care - Nursing Home - medical reasons

 - Alcoholism - treatment - Acupuncture - Ambulance - hire - Autoette or Wheelchair  - Birth Control Pills - Blind Persons Services    - Braces  - Capital Expenditures - - Car Equipment -  - Childbirth Preparation Classes -  - Chiropractors  - Christian Science Treatment    - Contact Lenses -  - Crutches   - Deaf Persons - Dental Fees   - Dentures   - Diagnostic Fees   - Diapers (adult disposable) -  - Doctor's Fees   - Domestic Aid - rendered by nurse   - Drug Addiction Recovery   - Drugs - prescription or over-the-counter * - Dyslexia Language Training   - Elevator for Alleviation of Cardiac Condition  - Eyeglasses and Examination Fees   - Fluoride Device - on advice of dentist - Halfway House - adjustment to mental hospital  

HSA Qualified Expenses

Maximize Your HSA:  Make sure you use every HSA qualified expense you are eligible for - don’t forget over-the-counter meds with a prescription, eyeglasses and contacts, and expenses for alternative care like homeopathy or chiropractor visits.  And to make sure you stay in the best HSA insurance plan for your needs, compare rates with competing plans at least once a year.

How to Establish your Health Savings Account

Once you have applied for a high deductible health insurance plan, you'll want to go ahead and set up your Health Savings Account.  You are not required to establish an HSA, but by funding the account as soon as possible you'll be able to take advantage of the tax-deductions and tax-deferred growth that HSAs offer.

To establish your HSA, follow the steps below:

1. First, you will need to choose the bank or trustee that you would like to administer your HSA.  While some insurance companies offer to administer your account (only if you have their insurance plan), you may also choose to work with an outside, third party administrator. For a list of companies offering HSAs, please visit our HSA Administrator page.  There you'll find information on fees, interest rates, and investment options. If you plan on keeping the money invested in an interest-bearing savings account, you'll want to initially look at the fees that the various administrators charge, and choose one with lower or zero fees, such as American Charter Bank.  Many of our customers choose to place their HSA funds with an administrator that offers investment options, such as HSA Resources or HSA Bank.

2. Once you have chosen your administrator, you will need to download their enrollment form.  You may obtain these forms on our HSA Administrator page by clicking on the name of the company you've chosen.  At the bottom of the administrator's web page, you can obtain their enrollment form by clicking the link that says "Open their Application."

3. After downloading the proper enrollment form, you will need to send it, along with your opening deposit, to the address listed on the enrollment form.  You will receive your introductory packet, including complete instructions on how to make future deposits and the options you have for withdrawing your funds, in approximately two weeks.

How to Maximize Your Tax Benefits

An HSA plan is really a pretty simple concept.  You have a high-deductible health insurance plan, which you hope to never use.  But if something big does happen, it will protect your assets and cover your medical expenses.  But there are a few things that you should know that can make a big difference in how much money you spend, and how much money you accumulate in your account.

Because HSA contribution limits are based on the number of months during the year in which you have a qualifying health insurance plan, you should get your coverage in place as soon as possible.

There are basically three different strategies you can take when deciding how to fund your health savings account.

1. Put no money in the account (or the minimum amount required to open the account), except when you incur a medical expense.  This strategy allows you to legally "launder" any money used to pay medical expenses.  In other words, by depositing money into your HSA, then immediately withdrawing it to reimburse yourself for medical expenses, you are making your medical expenses all tax-deductible.  You may want to use this strategy if you are on a tight budget and want to keep your cash outlay as low as possible.

2. Fully fund the account, or at least put in as much as possible based on your budget.  Take money out of the account any time medical expenses are incurred, and let the rest grow tax-deferred.  This strategy will maximize your tax deduction, while making your HSA funds available to pay any non-covered medical expenses before your deductible is met.

3. Fully fund the account, but pay all medical expenses from a non-HSA account.  Reimburse yourself for medical expenses at a later date.  This strategy will allow you to maximize your tax deduction, and will also allow you to maximize the tax-deferred growth of your HSA.  You can then reimburse yourself, tax-free, at any time in the future for medical expenses incurred over the ensuing years.  (For an example of this strategy, see Maximize Your HSA, Issue 3).

To maximize the potential growth of your funds, you may want to make your HSA deposits as early in the year as possible.  Any growth in your account is tax-deferred, like an IRA.Once you get your health insurance plan established, you may want to set up a Health Reimbursement Arrangement so that your business can cover the cost of your health insurance and other medical expenses, further reducing your taxes. 

How to Keep Your Health Insurance Premiums Low

1. Raise your deductible as your HSA account grows. When you fund your account you build up a financial "cushion" which allows you to raise your deductible as your account grows.  Every time you raise your deductible, your premium should go down.By the way, don't forget that every time you fund your account you get an instant tax-deduction.  When you offset the tax savings against your premiums, you'll find your net cost for an HSA plan can be very low. The maximum allowable contribution goes up every year with the rise of the Consumer Price Index.  The individual contribution limit is $3,050, and the family limit is $6,150.  So each year you can deposit greater amounts into your HSA and continue to raise your deductible, if you choose.

2. Stay healthy, so you can switch plans. All health insurance plans have rate increases.  If a rate increase happens to you, you can switch to a different insurance company - but only if you pass their underwriting requirements.  If chronic disease develops, you may be stuck with your current plan, and its accompanying rate increases, for eternity.  Or at least it may seem that long…If you pay attention to the pharmaceutical commercials, you learn lifestyle really has nothing to do with disease, and it is natural and healthy to be on many medications for the rest of your life, which will then solve your health problems. If you pay attention to the science, you know the truth is quite different. It appears lifestyle is probably 95% of the picture, and we know the occurrence of degenerative disease can be dramatically reduced and even prevented. We've found many HSA owners are interested in wellness, and disease prevention.  After all, they're paying for their own doctor visits if they do get sick.  We also believe it is because HSA owners are "forward thinking" people, and like to plan for their future - both financial and physical.  You can improve your odds of excellent health with just a few key habits:

◦ Eat very high quantities of fresh vegetables and fruits.  Shoot for 35% of your calories.  This will lower your risk for diabetes, high blood pressure, heart disease, cancer, and more.

◦ Limit your intake of sugar and starchy carbohydrates like bread and pasta.  The majority of health problems in the U.S. are related to metabolic diseases that involve insulin resistance, a direct result of eating too many processed foods.

◦ Exercise and lift weights. 

Need convenient affordable chiropractic care? Use your

Health Savings Account