Health Savings Accounts (HSAs) are tax-exempt accounts where funds grow to pay for medical expenses. They were created to help give control back to consumers and lower healthcare costs. HSAs provide a financial incentive for consumers to select a High Deductible Health Plan (HDHP). HDHPs have lower monthly premiums than traditional plans. The HSA/HDHP combination provides consumers with more incentive to shop carefully for healthcare services.
An HSA is your account. If you switch jobs, the HSA goes with you. Your money rolls over every year. There is no "use it or lose it" requirement.
In order to open an HSA, you must have a qualified High Deductible Health Plan. The IRS determines the guidelines for qualified HDHPs. The current IRS guidelines are:
IRS Requirements for 2009
Catch-Up Contribution (55 or older)*
* If a spouse is also 55 or older, a second HSA must be established and a second contribution of $1000 could be made to that account.
IRS Requirements for 2010
* If a spouse is also 55 or older, a second HSA must be established and a second contribution of $1,000 could be made to that account.
When you have a qualifying HDHP, the following contribution guidelines apply.
Here are some key points about distributions:
Do the funds belong to the employee?
Can the money be invested and the employees earn interest?
Can the employees use the funds for things other than medical expenses?
Can the employee take the money with them if they switch employers?
Do the funds rollover year-to-year?
Who can contribute to the account?
Employers and/or Individuals
HRAs are employer owned. FSAs have the "use it or lose it clause". Money has to be spent by the end of the calendar year or it is forfeited to your employer.