What is a Group Health Savings Account?

A Health Savings Account (HAS) is a lot like an IRA, except the money is used to pay for your qualified healthcare costs.

How HSAs Work:

1. HSA Plan participants enroll in an inexpensive high deductible health insurance plan.
2. A tax deductible savings account is opened to cover current and future medical expenses.
3. The money the participant deposits, as well as the earnings, is tax-deferred.
4. The money can be withdrawn to cover qualified medical expenses tax-free, with unused balances rolling over from year to year.

What is the difference between an MSA and an HSA?

HSA's are an improvement on the old Medical Savings Account program. HSA's can provide all of the following that MSA's didn't:

• Everyone with a qualified high deductible plan is eligible to participate
• HSA's are permanent and you can take them wherever you go
• Larger tax-deferred contributions are allowed
• More deductible options

What’s a Qualified High Deductible Health Insurance Policy?

• For 2005, a high deductible insurance plan is a health plan with a minimum deductible of $1,000 for self-only coverage, and $2,000 for family coverage, which are relatively low.
• For 2005, the plan’s maximum out-of-pocket (including deductibles and co-pays) must be no more than $5,100 for self-only coverage and $10,200 for family coverage. and preventive care can have first dollar coverage.
• You can purchase a high deductible health insurance plan without the savings account if you want.

How Does the Tax-Exempt Individual Savings Account Work?

• The savings account is designed to cover routine medical expenses and provide savings.
• In any given year you may deduct the amount you contribute into your HSA from your gross income.
• The higher your deductible, the more money you can deposit into your HSA.
• The maximum you can contribute per year is $2,900 for self-only coverage and $5,800 for family coverage in 2005, excluding "catch up" contributions for those 55 years and older.
• If your employment situation changes, you can still keep all of the money in your HSA, even if your employer contributed to the plan.
• You may spend the money in your HSA on anything the IRS Publication 502 considers a legitimate HSA health insurance expense.
• HSA funds can be used to pay for many alternative treatments, including dental, vision, and much more.