Health Savings Accounts (HSAs) are individual accounts which allow you to make contributions to pay for future medical expenses. You will be able to deduct your contributions to your HSA, and the account earnings will accumulate on a tax-deferred basis. Distributions from your HSA are tax free if they are used for qualified medical expenses. Any unused funds remain in the account, so there’s no “use it or lose it” stipulation. You may choose from a regular HSA Savings account or a variety of HSA Certificate Accounts. Click here for current rates.

Eligibility

You are eligible to contribute to a Health Savings Account if you are:

• Covered by a qualified high-deductible health plan (HDHP)
• Not covered by other health plans which do not qualify as an HDHP
• Not enrolled in Medicare
• Not claimed as a dependent on someone else’s tax return

HSAs are designed for individuals who have chosen a high-deductible health plan (HDHP). A qualified HDHP has a minimum deductible of $1,100 (individual coverage) or $2,200 (family coverage) and a maximum out-of-pocket expense of $5,600 (individual) and $11,200 (family) during 2008. If you are not sure if your health plan qualifies for an HSA, ask your insurance provider.

Your eligibility to contribute to an HSA is determined on the first day of every month. If you meet the eligibility test on that day, you can contribute for that month. 

Contributions

Once you open an HSA, you may contribute up to $2,900 per individual and $5,800 per family during 2008. Individuals or employers can contribute to an HSA at any time throughout the year up to the applicable contribution limit. And if you’re age 55 or older, you can make additional “catch-up” contributions.

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