Health Savings Accounts - FAQ

What is a Health Savings Account?

A Health Savings Account is money put in a special account owned by an individual to pay current and future medical expenses.

Who is eligible for an Health Savings Account?

  • Covered by a High Deductible Health Plan (HDHP).
  • Generally not covered by any health plan that is not a HDHP.
  • Not enrolled in Medicare.
  • Not eligible to be claimed as a dependent on another person's income tax return.

Definition of High Deductible Health Plans

A health plan is a high deductible health plan (HDHP) if the plan satisfies both an annual deductible and an out-of-pocket expense requirement.

Health Savings Account Contribution Limits:

Year Self Family Catch-up (age 55+)
2012 $3,100 $6,250 $1,000
2013 $3,250 $6,450 $1,000

Contributions may be made by:

  • The individual.
  • The employer.
  • By others on behalf of the individual.

Health Savings Account Distributions

Qualified Medical Expenses are medical expenses that are:

  • Incurred on behalf of the HSA owner, spouse or dependents.
  • Incurred after a HSA has been established.
  • Not covered by insurance.
  • Paid by the HSA owner, spouse or dependent.

If a distribution is not used for Qualified Medical Expenses:

  • The distribution amount will be included in income.
  • 10% penalty will be assessed; this penalty will be waived upon death, disability or attaining age 65.

* Consult your tax advisor regarding the tax advantages of a Health Savings Account.