- What is a Health Savings Account (HSA)?
An HSA is a tax-exempt account established for the purpose of paying medical expenses in conjunction with a high deductible health plan (HDHP) using pre-tax (or tax deductible) dollars. It allows the account holder to save money, tax-free, for future expenses.
- What is a High Deductible Health Plan (HDHP)?
An HDHP is a health insurance plan with a minimum individual deductible of $1000 for 2005 and $1050 for 2006, or a minimum family deductible of $2000 for 2005 and $2100 for 2006. Annual out-of-pocket, including deductibles and co-pays for individual cannot exceed $5100 for 2005 and $5250 for 2006; for families, $10,200 for 2005 and $10,500 for 2006.
- Who is eligible for an HSA?
With respect to any month, an individual who:
*is covered under an HDHP on the first day of such month;
*is not also covered by any other health plan that is not an HDHP (with certain exceptions);
*is not enrolled in Medicare (generally, has not reached age 65);
*may not be claimed as a dependent on another's tax return.]
- How much can I contribute to an HSA?
Annual contributions are limited to the lesser of your insurance plan deductible or the federal maximum. Limits for 2005 are $2650 individual, $5250 family. For 2006, limits are $2700 individual, $5450 family.
- When can I make contributions to my HSA?
You may make contributions to your account beginning the first full month that you are enrolled in an eligible HDHP. You have until April 15 of the following year to make contributions for the previous tax year.
- What is a "qualified medical expense"?
Qualified medical expenses are defined by the IRS. They generally include deductibles, co-payments, prescription medications and other medical supplies. A detailed explanation can be found at www.irs.gov. It is your responsibility to determine which expenses are qualified and to retain statements and receipts to support withdrawals and payments.
- Do the funds need to be in my account before I can pay for a qualified medical expense?
Yes, this is a personal transaction account in your name. If you do not have sufficient funds in your HSA to pay the expense, you will need to pay for the expense by other means. Once the funds are in your HSA, however, you can reimburse yourself for what you personally paid.
- Why can't I use my HSA debit card at an ATM?
The Federal Regulations surrounding HSA accounts state that HSA funds used for medical expenses are allowed distributions. The ATM surcharges would not be included as an allowable medical expense, and therefore would be charged a 10% penalty. Until such time as this regulation is changed or we are able to have the HSA card recognized as being different from our other debit cards at ATMs, we felt it was important to protect our customers from these penelty charges.
- Can my employer take money out of my account or find out how much money is in my account?
NO. Your HSA account belongs to you! This also means that you are responsible for maintaining records to document that the HSA is being used for qualified medical expenses in order to maintain the tax exempt status of the account.
- Why can't my spouse or another individual be listed on the account with me?
The federal regulation that established these tax-exempt accounts declares that they must be individually owned. You may give your spouse or another individual "power of attorney" to make purchases for you, and we can issue them a Debit Card in their name as POA.
- What are the benefits of an HSA?
*Withdrawals for qualified medical expenses are non-taxable.
*You can receive a tax deduction for the contributions you make.
*Contributions accumulate tax-free.
*Account balances carry over from year to year.
*HSAs are portable so you can change jobs and relocate with the account.
*At age 65, funds can be withdrawn without penalty and used for non-medical purposes, taxable as ordinary income.
- How will I tell the difference between my regular RNB debit card and my HSA debit card?
We've made this easy! The HSA debit card looks nothing like the regular RNB debit card or ATM card, and it has "Health Savings Account" written on it.
- Where do I get a High Deductible Health Plan?
You should talk to your local Health Insurance representative. They will have details about various insurance plans that qualify for HDHP status according to the IRS guidelines. Make sure that you tell them you would like to have and HSA with Randolph National Bank!
