HEALTH SAVINGS ACCOUNT

WHAT IS A HEALTH SAVINGS ACCOUNT?

A Health Savings Account (HSA) is a savings account established exclusively to pay for medical expenses of an individual or family who has contributed to the account while enrolled and covered under a high-deductable health plan.

WHAT IS A HIGH-DEDUCTIBLE HEALTH PLAN?

A health plan is a high deductible health plan when certain requirements in terms of annual deductibles and annual out-of-pocket maximums are met.

The annual deductible requirement for an individual is at least $1000 and an out-of-pocket expense maximum that does not exceed $5000.

The annual deductible requirement for a family is at least $2000 and an out-of-pocket expense maximum that does not exceed $10,000.

OUT-OF-POCKET EXPENSES INCLUDE:

*DEDUCTIBLES--the amount you pay for your health care each year before your insurance planbegins to pay

*COPAYMENT--a specific dollar amount of a covered service that you pay at the time of the service is rendered (for example, prescription drug co-pays)

*COINSURANCE--the percentage of a covered service that you pay

WHY HAVE A HEALTH SAVINGS ACCOUNT?

The Health Savings Account (HSA) provides a way to fund your health care expenses nowand in the fiture and to save for long-term care expenses. When the funds are used for these eligible health care expenses, the savings may be tax exempt.

The high-deductible health plans are provided by health insurance companies. The HSA is administered by a financial institution. You may choose any financial insutitution that is qualified to provide this service. We advise you to consult with your tax advisor for assistance in setting up your HSA.

WHAT IS THE ADVANTAGE OF AN HSA

Your high-deductible health plan works in conjunction with your HSA. The plan provides benefits for covered medical services once applicable deductibles are satisfied. The funds you deposit in your HSA can be used to pay for medical expenses applied to your deductible.

Some medical expenses not covered by the HDHP may still qualify for funding from your HSA without tax penalty. Please refer to 213d of the IRS Code for information regarding what medical expenses can be covered by your HSA.

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