SECTION 1: GENERAL PRODUCT OVERVIEW

What is a Health Savings Account (HSA)?
A Health Savings Account is an alternative to traditional health insurance. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.

You must be covered by a High Deductible Health Plan (HDHP) to be eligible to take advantage of HSAs. An HDHP generally costs less than traditional healthcare coverage, so the money that you save on insurance can therefore be put into the Health Savings Account.

You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You also decide what types of investments to make with the money in the account in order to make it grow.

What is a High Deductible Health Plan (HDHP)?
You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of healthcare expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your HDHP does not cover.

For 2008, in order to qualify to open an HSA, your HDHP minimum deductible must be at least $1, 100 (self-only coverage) or $2,200 (family coverage). The annual out-of-pocket (including deductibles and co-pays) for 2008 cannot exceed $5,600 (self-only coverage) or $11,200 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and co pays & coinsurance) for non-network services.

How can I get a Health Savings Account?
Consumers can sign up for HSAs with banks, credit unions, insurance companies and other approved companies. Your employer may also set up a plan for employees as well.

Who is eligible for a Health Savings Account?
To be eligible for a Health Savings Account, you must be covered by a HSA-qualified High Deductible Health Plan (HDHP) and must not be covered by other health insurance that is not an HDHP. Certain types of insurance are not considered “health insurance” (see below) and will not jeopardize your eligibility for an HSA.

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Can I get an HSA even if I have other insurance that pays medical bills?
You are only allowed to have auto, vision, disability, dental and long-term care insurance at the same time as an HDHP. You may also have coverage for a specific disease or illness as long as it pays a specific dollar amount when the policy is triggered. Wellness programs offered by your employer are also permitted if they do not pay significant medical benefits.

Does the HDHP policy have to be in my name to open an HSA?
No, the policy does not have to be in your name. As long as you have coverage under the HDHP policy, you can be eligible for an HSA (assuming you meet the other eligibility requirements for contributing to an HSA). You can still be eligible for an HSA even if the policy is in your spouse’s name.

I don’t have health insurance, can I get an HSA?
You cannot establish and contribute to an HSA unless you have coverage under a HDHP.

I’m on Medicare, can I have an HSA?
You are not eligible for an HSA after you have enrolled in Medicare. If you had an HSA before you enrolled in Medicare, you can keep it. However, you cannot continue to make contributions to an HSA after you enroll in Medicare.

My spouse has an FSA or HRA through their employer, can I have an HSA?
You cannot have an HSA if your spouse’s FSA or HRA can pay for any of your medical expenses before your HDHP deductible is met.

I don’t have a job, can I have an HSA?
Yes, if you have coverage under an HDHP. You do not have to have earned income from employment – in other words, the money can be from your own personal savings, income from dividends, unemployment or welfare benefits, etc.

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SECTION 2: FUNDING AN HSA

Does my income affect whether I can have an HSA?
There are no income limits that affect HSA eligibility. However, if you do not file a Federal income tax return, you may not receive all the tax benefits HSAs offer.

I’m a single parent with HDHP coverage but have a child/relative that can be claimed as a dependent for tax purposes, and this dependent also has non-HDHP coverage. Am I still eligible for an HSA?
Yes, you are still eligible for an HSA. Your dependent’s non-HDHP coverage does not affect your eligibility, even if they are covered by your HDHP.

How much can I contribute to my HSA each year?
The annual HSA maximum contribution is $2,900 if you have single coverage and $5,800 for family coverage.

I have a very high deductible, is there a limit on how much I can contribute?
The most you can put into your account for 2008 is $2,900 if you have single coverage and $5,800 for a family. These amounts will be increased for inflation in future years. If you are age 55 or older, you can also make additional “catch-up” contributions.

Do my HSA contributions have to be made in equal amounts each month?
No, you can contribute in a lump sum or in any amounts or frequency you want. However, your account trustee/custodian (bank, credit union, insurer, etc.) may impose minimum deposit and balance requirements.

Does my contribution depend on when I establish my HSA account or when my HDHP coverage begins?
Yes, your eligibility to contribute to an HSA is determined by the effective date of your HDHP coverage. Medical expenses incurred before the date your HSA is established cannot be reimbursed from the account.

Can my employer contribute to my HSA?
Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. If your employer contributes some of the money, you can make up the difference.

*The Bank will make reasonable efforts to update these FAQs as needed to reflect changes in federal regulations. However, these FAQs do not constitute legal advice and The Bank makes no warranties with respect to the same.

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