Health Savings Accounts

Health Savings Accounts (HSA) are becoming more popular as the cost of health insurance continues to increase.

An HSA is a special bank account that is set up in conjuctions with the enrollment in a high deductible health plan (HDHP).

You, your employee or an eligible family member can make tax free contributions to the HSA. The HSA will earn interest that is not taxed and any withdrawals to pay for qualified medical expenses are also not taxed. Any funds remaining in the account at the end of each year is carried over to the next year.

The contribution to an HSA each year is limited to the amount of the HDHP deductible or $2,650 for individuals and $5,250 for families, whichever is less. You or your employee may not contribute to an HSA once you or your eomployee becomes eligible for and enrolled in Medicare. Your or your eomployee can make withdrawals to pay for qualified medical expenses by check or debit card just as you would with any other bank account.

Your employee owns the HSA so that your employee can keep the account even if he changes health insurance plans or jobs. However, if the owner of the account is not enrolled in an HDHP, he can no longer make contributions to the account.

An HDHP is a health insurance plan that has a high deductible of, at least, $1,000 for individuals and $2,000 for families, adjusted each year for the cost of living. Despite the high deductibles most HDHPs will cover preventative care in full. To be enrolled in an HDHP, the enrollee cannot be covered by any other health insurance coverage, including under a spouse's plan, that is not a HDHP.

An HSA provides a method for you or your employees to reduce health insurance costs by enrolling in a less expensive HDHP as long as you or your employees are willing to finance, through the HsA, the medical expenses that are incurred, up to the amount of the deductible.

You should consult with a tax advisor to determine eligibility requirements and tax advantages before you decide to participate in an HSA.

If you and your employees decide that an HSA is a good alternative to the more traditional health insurance plans, The United State Federation of Small Businesses (USFSB) can offer you, from selected carriers, this less costly option.

Another way USFSB can help you reduce your costs for medical services is through the use of a Medical Discount Card. It is important to note that this is not insurance. The Medical Discount Card can be used, at participating health care providers, to obtain reduced cost for the services that are rendered as long as you are prepared to pay for the services at that time.