Health Insurance Specialists - HSA's (Health Savings Accounts) for Businesses, Individuals & Families.

Save Premium & Build Tax-Favored Savings with an HSA (Health Savings Account)

Health Savings Accounts ( HSA ) for Individuals and Families in Arizona - Tax Deductible account for medical expenses HSA's for an Individual / Family
Todd & Mary were tired of paying high premiums to an Insurance Company. They rarely needed to see a Doctor, and their annual healthcare expenses were very low. Worse yet, some healthcare expenses weren't covered by their Insurance plan (such as Dental or Eyeglasses).

They decided to split their health insurance budget into two segments:

•	They lowered their premium for health insurance by taking a High Deductible Health Plan, which paid for large medical bills. An added bonus is that it also paid 100% for preventive care.
•	They deposited this premium savings into a fund, called a Health Savings Account. Their deposit is tax-deductible.

They can use the money in this fund (tax free) to pay for healthcare expenses, even their Dental & Vision needs that weren't covered by insurance. Since their Health Plan pays 100% for Preventive Care, they have very few medical expenses. They feel secure, knowing that they have a High Deductible Health Plan to protect them from large losses. They have a cash balance in their HSA fund at the end of every year, which they are saving for retirement.

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Tax Deductible Health Savings Accounts ( HSAs ) for Businesses in Arizona HSA's for Businesses
(custom-designed)
Businesses, large and small, can benefit by using an HSA. The business saves premium by choosing a health plan with a high deductible.

The premium savings can be deposited into Health Savings Accounts for the Employees. But a business has many options for funding the HSA fund, ranging from fully Employer funded to fully Employee funded.

The business can even chose to do an Employer match. The business can also choose a "dual choice option", giving Employees a chance to enroll in the HSA, or a more traditional health plan.

Business owners often like the fact that they can give Employees good healthcare benefits, and also give cash to those who don't have large healthcare expenses.

Even more, business owners like the idea that Employees now have an incentive to save, and to make good consumer choices about healthcare expenditures. Statistics show that claims decrease when consumers have an incentive to control costs. That should translate into lower renewal rate increases for the business in the future.

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Facts about HSA's

Basic Facts

•	Health Savings Accounts are arrangements that involve two parts:
	•	A Qualified High Deductible Health Plan (often called a QHDHP or HDHP).
	•	A Health Savings Account (a cash fund), which is tax-deductible.

Tax Favored Status

•	Contributions INTO the Health Savings Account Fund (the cash account)
	•	For Individual / Family HSA plans:
		•	The contribution to the HSA fund is tax deductible on page one of IRS Form 1040
	•	For Businesses (Group HSA plans)
		•	An Employer's contribution is deductible as a business expense
		•	An Employer match can be done (pre-tax) through a Section 125 plan
		•	An Employee's contribution is deductible on page one of IRS Form 1040, or;
		•	An Employee's contribution can be contributed (pre-tax) through a Section 125 plan
•	Distributions FROM the Health Savings Account Fund (the cash account)
	•	Non-taxed if used for qualified healthcare expenses, including:
		•	the deductible for the High Deductible Health plan
		•	other healthcare expenses allowable under Section 213(d) of the IRS Code, including dental, vision, etc. See below for a larger list of qualified expenses.
	•	Taxable if used for any other reason, and also subject to a 10% penalty, unless:
		•	Withdrawals are taken after age 65
		•	Withdrawals are taken after suffering a Total Disability
		•	Withdrawal of funds ONCE A YEAR, without limitation on what those funds can be spent on, provided that the funds are returned to the HSA within 60 days (known as the "playing with fire" rule)

Limits to Contributions INTO the Health Savings Account (the cash account)

•	Contributions INTO a Health Savings Account Fund can only be deposited for persons who are covered under a Qualified High Deductible Health Plan (QHDHP), and who have no other health insurance coverage. (But distributions FROM a Health Savings Account Fund can be used, non-taxable, for the qualified healthcare expenses of your spouse or dependent, whether or not that person is covered under a Qualified High Deductible Health Plan)
•	Beginning in 2007, annual contributions into a Health Savings Account are no longer limited by the amount of your deductible. Statutory maximums for 2007 are:
	•	$2,850 for an individual
	•	$5,650 for a family
	•	Catch-up contributions for those over age 55, of $800
	•	These amounts are adjusted every year, due to Cost of Living Adjustments (COLA)
•	In 2008, statutory maximums are:
	•	$2,900 for an individual
	•	$5,800 for a family
	•	Catch-up contributions for those over age 55, of $900
	•	These amounts are adjusted every year, due to Cost of Living Adjustments (COLA)
•	Excess contributions are subject to a 6% excise tax
•	Beginning in 2007, you no longer are required to pro-rate your contribution if you begin an HSA-eligible plan mid-year, so long as you are covered under a HSA-eligible plan for a full 12-month calendar year. This means you must remain on an HSA-eligible plan for the remainder of the year, plus one more full year.
•	You can "front load" or fully fund your HSA account on day one of the calendar year
•	You can deposit funds into your HSA in a lump sum or in any amounts or frequency you wish, and which is acceptable by your bank/account trustee.
•	You can delay contribution into your HSA Fund until you have qualified healthcare expenses, provided that you actually opened the HSA account and established a minimum balance before the date of the qualified healthcare expenses
•	Employers must make COMPARABLE contributions to all Employees' Health Savings Accounts. Beginning in 2007, greater contributions are allowed for lower paid employees.
•	There are provisions for rollovers from IRA's, FSA's, and HRA's into an HSA

Ownership, Portability and Administration

•	The Health Savings Account Fund (the cash account) is owned by the Employee (or Individual), not the Employer, even if the Employer contributed into it.
•	The Health Savings Account Fund is under the complete control of the Employee (or Individual), for all purposes, including investment and withdrawals. It cannot be subject to any controls by the Employer or by the Insurance Company.
•	The cash balance in the Health Savings Account Fund rolls over from year to year.
•	The cash balance in the Health Savings Account Fund is portable, and will continue to belong to the Employee (or Individual), even if he/she leaves employment or terminates coverage under the Qualified High Deductible Health Plan.
•	The Qualified High Deductible Health Plan (the health insurance) is separate from the Health Savings Account (the cash account)
•	All investment & banking decisions are at to discretion of the Employee (or Individual), although an Employer may recommend a particular Bank, Trustee, or Third Party Administrator (TPA).
•	Some Banks, Trustees or Custodians may charge fees, including Account Set-up Fees, monthly fees, etc., and they may require minimum balances. An Employer may choose to pay the fees.
•	Administration, Distributions, and Claims handling are the responsibility of the Employee (or Individual) who owns the HSA Fund, unless a Third Party Administrator (TPA) is chosen to administer them.
•	Some HSA Funds have debit cards for convenience in paying for qualified healthcare expenses
•	Claims handling may become more difficult, as there are no copays. Typically, the patient shows an ID card for the QHDHP (the health plan), then the Provider bills the Insurance Company. When an Explanation of Benefits (EOB) is produced by the Insurance Company, it will show the billed amount, the discount that an In-Network Provider must allow, and the amount that is the member's responsibility. The member would then pay this amount to his Provider, using a debit card or check from the HSA Fund.
•	Immediate claims may pose a problem. For instance, if you plan to make monthly contributions into your HSA fund, you may not have enough cash in the fund if you were to have a hospitalization soon after beginning the HSA.

Plan Design restrictions required by Federal Law for Qualified High Deductible Health Plans (QDHP's)

•	No copays can be offered as benefits - all expenses must be subject to the deductible, except for Preventive Care.
•	For 2007, Deductibles must be within these limits:
	•	$1,100 or more for an individual covered alone
	•	$2,200 or more for family coverage
•	For 2007, Out-of-Pocket Maximums must be within these limits:
	•	$5,500 or less for an individual covered alone
	•	$11,000 or less for family coverage
•	For 2008, Deductibles remain the same (within these limits):
	•	$1,100 or more for an individual covered alone
	•	$2,200 or more for family coverage
•	For 2008, Out-of-Pocket Maximums must be within these limits:
	•	$5,600 or less for an individual covered alone
	•	$11,200 or less for family coverage
•	Preventive care can have 100% benefits
•	Some plans may use an aggregate family deductible (instead of the typical plan that has an individual deductible, but states a limit to how many deductibles would apply in a family).
•	There may be a Network of Providers, and Out-of-Pocket expenses can be high for use of Non-Network Providers
•	Provider Discounts (for use of In-Network Providers) will be given, even if the member is using his HSA cash fund to pay the bill for covered service.

Section 213 Expenses

•	These are qualified healthcare expenses allowed by the IRS, for which you can use your Health Savings Account (the cash account), even if these expenses are not a covered benefit under your QHDHP (the health insurance plan).
•	This is a partial list of some of the most popular healthcare expenses that qualify:
	•	Dental treatment
	•	Braces
	•	Dentures
	•	Vision expenses
	•	Laser eye surgery
	•	Eyeglasses
	•	Contact lenses
	•	Hearing aids & batteries
	•	Fertility enhancement
	•	Birth control pills
	•	Chiropractic treatment
	•	Crutches, Wheelchairs, Braces, etc.
	•	Dermatology
	•	Long-Term Care premiums (within limits)
	•	Nursing home expenses
	•	Nursing services
	•	Special home for the mentally retarded
	•	Special school costs for the handicapped
	•	Sterilization
	•	Maternity services
	•	Stop-smoking programs (physician prescribed)
	•	Premiums as follows:
		•	COBRA premiums
		•	certain Long-Term Care premiums
		•	Health Insurance Premiums ONLY if you are receiving Federal or State Unemployment benefits
	•	Out-of-pocket expenses for your spouse or dependent, even if not insured under an HSA (a non-QHDHP)
	•	Healthcare expenses provided in foreign countries
•	A partial list of some NON-QUALIFIED expenses are:
•
	•	Premiums (except as listed above)
	•	Babysitting
	•	Domestic Help
	•	Electrolysis or Hair Removal
	•	Nutritional Supplements
	•	Teeth Whitening
	•	Cosmetic Surgery (Elective)
	•	Hair Transplants
	•	Advance payment for future medical expenses
•	See IRS Publication 502 for more information

This general summary is not intended to be a full description of the benefits, limitations or requirements of HSA's or QHDHP's, nor is it intended to be legal, investment, or tax advice. Contact your tax advisor for more information about the tax-favored status of HSA's, and read the brochures, policies, certificates of coverage, and investment contracts for more information.

Following are some helpful links:

"HSA Basics" from the US Treasury Department - an easy to read description of rules governing HSA's, including most of the questions frequently asked by Consumers & Employers.

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