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HSA - Health Savings Account

Individuals enroll in the BCBS Bronze Plan HSA1. All charges, including those for prescription drugs, go toward the $6,400 deductible for individual coverage. Copays are eliminated until you meet your deductible. Then you have copays for your drugs. After you have paid $6,550 for covered expenses, all covered services are covered at 100% for the remainder of the year.

 Contributions can be made to a HSA on a tax-free basis and the interest earned is tax-free. Those with employee only coverage can contribute $3,500 and those will family coverage can contribute $7,00 per year. Those age 55+ can contribute an additional $1,000 per year. To avoid a penalty, the money must be spent on medical, dental or vision expenses*; however, the funds can be spent for anything after age 65. Unused funds remain in the HSA and roll to the next year. This is another way to save money for retirement.

*Funds spent on dental and vision expenses do not count toward your medical deductible with BCBS.

We can assist you with enrollment in a Health Savings Account. The annual fee is $25 and includes a HSA debit card.  

Health Savings Accounts

A Health Savings Account (HSA) is an account that you can put money into to save for future medical expenses.  There are certain advantages to putting money into these accounts, including favorable tax treatment.  HSAs were signed into law by President Bush on December 8, 2003.

Advantages of HSAs

Security – Your high deductible insurance and HSA protect you against high or unexpected medical bills.

Affordability - You should be able to lower your health insurance premiums by switching to health insurance coverage with a higher deductible.

Flexibility – You can use the funds in your account to include expenses that your insurance may not cover, or save the money in your account for future needs, such as:

  • Health insurance or medical expenses if unemployed
  • Medical expenses after retirement (before Medicare)
  • Out-of-pocket expenses when covered by Medicare
  • Long-term care expenses and insurance

Savings – You can save the money in your account for future medical expenses and grow your account through investment earnings.

Control – You make all the decisions about:

  • How much money to put into the account
  • Whether to save the account for future expenses or to pay current medical expenses
  • Which medical expenses to pay from the account
  • Which company will hold the account
  • Whether to invest any of the money in the account
  • Which investments to make

Portability – Accounts are completely portable, meaning you can keep your HSA even if you:

  • Change jobs
  • Change your medical coverage
  • Become unemployed 
  • Move to another state
  • Change your marital status

Ownership – Funds remain in the account from year to year, just like an IRA.  There are no “use it or lose it” rules for HSAs.

Tax Savings - An HSA provides you triple tax savings:

  1. Tax deductions when you contribute to your account
  2. Tax-free earnings through investment
  3. Tax-free withdrawals for qualified medical expenses

Who Can Have an HSA?

Any adult can contribute to an HSA if they:

  • Have coverage under an HSA-qualified “high deductible health plan” (HDHP)
  • Have no other first-dollar medical coverage (other types of insurance such as specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted)
  • Are not enrolled in Medicare
  • Cannot be claimed as a dependent on someone else’s tax return.

Contributions to your HSA can be made by you, your employer, or both.  However the total contributions are limited annually.  If you make a contribution, you can deduct the contributions (even if you do not itemize deductions) when completing your federal income tax return.

Contributions to the account must stop once you are enrolled in Medicare.  However, you can keep the money in your account and use it to pay for medical expenses tax-free.

Opening Your Health Savings Account

Banks, credit unions, insurance companies and other financial institutions are permitted to be trustees or custodians of these accounts.  Other financial institutions that handle IRAs or Archer MSAs are also automatically qualified to establish HSAs

What Happens to My HSA When I Die?

If your spouse becomes the owner of the account, your spouse 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).