What is a Health Savings Account?

A Health Savings Account (HSA) is a tax preferred account owned by an individual used to pay for current and future medical expenses.

• HSAs are funded by tax deductible individual contributions. In addition, employers may contribute to employees’ HSAs. The limits on total contributions are listed below:
  
  

  Coverage	Contribution Maximum 2008	Contribution Maximum 2009
  Individual with Self Coverage	$2,900	$3,000
  Individual with Family Coverage	$5,800	$5,950
  Catch Up Contributions (Age 55 and older)	$900	$1,000

  
  
• HSAs contributions can be made by individuals covered by eligible health plans and with no disqualifying coverage
  
  
• The interest and investment earnings generated by the account are tax-free while kept in the HSA.
  
  
• HSAs are portable, so an individual is not dependent on a particular employer to enjoy the advantages of having an HSA. Like an individual retirement account (IRA), the HSA is owned by the individual, not the employer. If the individual changes jobs, the HSA goes with the individual.
  
  
• HSAs were created in Medicare legislation signed into law by President Bush on December 8, 2003. (Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173).
  
  
• Find out if you qualify for an HSA

Before making any decisions regarding health care coverage, it is important that you first contact you tax advisor, or insurance consultant.

Take a few minutes to review a self-paced Online Briefing on HSAs.