Health Savings Accounts (HSAs)

Health Savings Accounts (HSAs) were created by Congress as part of the Medicare Reform Legislation and signed into law in 2003. HSAs allow employees in High-Deductible Health Plans (HDHP) to establish pre-tax savings accounts to be used for qualified medical expenses. A HDHP for 2009, must have a deductible that is at least $1,100 for self-only coverage or $2,200 for family coverage, and has an out-of-pocket expense limit that is no more than $5,800 in the case of self-only coverage, and $11,600 in the case of family coverage.

Earnings on the account may be used to pay qualified medical expenses without incurring any tax liability. Unlike Flexible Spending Accounts (FSAs), the money placed into an HSA does not need to be spent the year it is deposited. In fact, it can be kept in the account indefinitely and used at any later date.

The ability to save money in an HSA allows your employer to offer you medical benefits at more competitive rates, thus minimizing or eliminating the amount you must contribute toward premiums. These savings can be used to fund your HSA while lowering your tax liability and preparing you for your future long-term medical needs.

How much can I contribute per year?

Congress established contribution limits that escalate each year. For 2012, you may contribute up to $3,100 for individual coverage or up to $6,250 for family coverage.

Both individuals and employers can contribute to an HSA, but the limit must not be exceeded. Individuals over at 55 (and not yet enrolled in Medicare) can make additional “catch-up” contributions of up to $1,000 per person for 2012. this can provide extra help to many early retirees.

What are the benefits?

  • Reduced income tax liability*
  • Ease of opening an account
  • Low minimum opening deposit
  • Tiered interest rates to encourage long-term savings
  • Easy access to funds – pay with checks
  • Portability - if you change jobs or move, the money stays in your account and is yours to use on qualified medical expenses

With the tax advantages and benefits of an HSA, you are in control. Spending your health care dollars wisely now can help you save for future health care needs.

Contact your Benefits Administrator today and ask how Members’ Advantage Credit Union can provide you with the HSA you need to get started.

If you already have a HDHP, contact us today to establish your HSA. If you have further questions, please contact us for more information and assistance.

* Please consult a tax advisor.