Health Savings Account (HSA)

A Health Savings Account is an individual tax-exempt Trust Account set up in conjunction with an IRS approved high deductible health plan. It is designed to pay for qualified medical expenses and/or provide savings for the future.

Contributions:

Are deposited in lump sum or smaller amounts
Can be made on first of year or throughout the year
Can be made by employer and/or employee
Full contributions made by April 15 of the following year
Federal Tax Laws prohibit contributions into the H.S.A. account on behalf of domestic partners and parties to a civil union.
Maximum Annual Contributions are: $3,050 Individual/$6,150 Family

Withdrawals can be used for:

Medical expenses on a tax-free basis. Medical expenses include "ordinary medical expenses" as defined by your health plan and "other" expenses as defined by IRS Publication 502
COBRA continuation coverage
Insurance Premiums while on unemployment compensation
Long-term care insurance premiums

NOTE:

*10% Penalty and income taxes due on withdrawals for Non-qualified expenses.
Penalty-free withdrawals for non-medical expenses upon disability, death or at age 65

HSA Account Funds:

May earn tax-deferred income
May be accumulated for the future
Most banking institutions offer payments via check writing and debit card, interest bearing checking
accounts, money market, bond and equity mutual funds.
Allow a one-time, tax-free rollover of health FSA/HRA amounts to an H.S.A. account.
*Note - certain conditions must be satisfied.
Allow a one-time, tax-free trustee to trustee transfer of IRA funds to an H.S.A. account. *Note - certain conditions must be satisfied.
*Allow full year contributions for individuals who enroll in an HDHP up until December 1rst of each year. *Note - certain conditions apply.
You are not required to use H.S.A. funds to pay current medical bills.

Catch-Up Contribution Provision:

Eligible individuals between 55 and 65 years of age, my make an additional $1,000 per year contribution to their H.S.A.

HSA eligible/ineligible Expenses for HSA’s

Eligible Medical Expenses (For HSA Distributions)
	Abdominal supports Acupuncture Air conditioner (when necessary for relief from difficulty in breathing) Alcoholism treatment Ambulance Anesthetist Arch supports Artificial limbs Autoette (when used for relief of sickness/disability) Birth Control Pills (by prescription) Blood Tests Blood transfusions Braces Cardiographs Chiropractor Christian Science Practitioner Contact Lenses Contraceptive devices (by prescription) Convalescent home (for medical treatment only) Crutches Dental Treatment Dental X-rays Dentures Dermatologist Diagnostic fees Drug addiction therapy Drugs (prescription) Elastic hosiery (prescription) Eyeglasses Fees paid to health institute prescribed by a doctor FICA and FUTA tax paid for medical care service Fluoridation unit Guide dog Gum treatment Gynecologist Hearing aids and batteries Hospital bills Hydrotherapy Insulin treatment Lab tests Lead paint removal Legal fees Lodging (away from home for outpatient care) Metabolism tests Neurologist Nursing (including board and meals) Obstetrician Operating room costs Ophthalmologist Optician Optometrist Oral surgery Organ transplant (including donor's expenses) Orthopedic shoes Orthopedist Osteopath Oxygen and oxygen equipment Pediatrician Physician Physiotherapist Podiatrist Postnatal treatments Practical nurse for medical services Prenatal care Prescription medicines Psychiatrist Psychoanalyst Psychologist Psychotherapy Radium Therapy Registered nurse Special school costs for the handicapped Spinal fluid test Splints Sterilization Surgeon Telephone or TV equipment to assist the hard-of-hearing Therapy equipment Transportation expenses (relative to health care) Ultra-violet ray treatment Vaccines Vasectomy Vitamins (if prescribed) Wheelchair X-rays

Eligible Over-the-Counter Drugs (For HSA Distributions)
	Antacids Allergy Medications Pain Relievers Cold medicine Anti-diarrhea medicine Cough drops and throat lozenges Sinus medications and nasal sprays Nicotine medications and nasal sprays Pedialyte First aid creams Calamine lotion Stop-smoking programs Wart removal medication Antibiotic ointments Suppositories and creams for hemorrhoids Sleep aids Motion sickness pills

Ineligible Expenses for HSAs Health Insurance may not be purchased with HSA Funds. There are four situations which are exceptions whereby HSA funds can be used to pay for:
	A health plan during any period of continuation coverage required under any federal law. A qualified long-term insurance contract A health plan during a period in which the individual is receiving unemployment compensation under federal or state law For individuals over age 65, premiums for Medicare Part A or B, a Medicare HMO and/or the employee share of premiums for the employer-sponsored health insurance, including premiums for employer-sponsored retiree health insurance.

Ineligible Medical Expenses
	Advancement payment for services to be rendered next year Athletic club membership Automobile insurance premium allocable to medical coverage Boarding school fees Bottled water Commuting expenses of a disabled person Cosmetic surgery and procedures Cosmetics, hygiene products and similar items Funeral, cremation, or burial expenses Health programs offered by resort hotels, health clubs, and gyms Illegal operations and treatments Illegally procured drugs Maternity clothes Non-prescription medication Premiums for life insurance, income protection, disability, loss of limbs, sight or similar benefits Scientology counseling Social activities Special foods and beverages Specially designed car for the handicapped other than an autoette or special equipment Swimming pool Travel for general health improvement Tuition and travel expenses a problem child to a particular school Weight loss programs

Ineligible Over-the-Counter Drugs
	Toiletries (including toothpaste) Acne treatments Lip balm (including chapstick or carmex) Cosmetics (including face cream and moisturizer) Suntan lotion Medicated shampoos and soaps Vitamins (daily) Fiber supplements Dietary supplements

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