What are Health Savings Accounts (HSAs)?
Who is eligible to open an HSA?
Who can contribute to my HSA?
How much can be contributed to an HSA?
Is the money I contribute to my HSA tax free?
What are eligible health care expenses that can be paid from my HSA?
What happens to my HSA if I change jobs?
Where can I find a high deductible health plan in Michigan?
Who can open an HSA account for me?
Where can I go to find more information on HSA’s?

What are Health Savings Accounts (HSAs)?
HSAs are tax-exempt accounts set up by an employer or individual to pay eligible health care expenses including insurance policy deductibles, co-payments and other out-of-pocket medical expenses. An HSA must be established with a high deductible health plan so that the HSA is used to pay routine expenses, and the plan is used to pay more significant expenses.

HSAs were created to replace Medical Savings Accounts (MSAs), another special account used to pay eligible health care expenses. Effective January 1, 2004, no new MSAs may be opened under federal law. However, existing MSAs may continue to be operated, or may be rolled over into an HSA.

HSAs allow employers and consumers to set aside funds on a tax-free basis to pay health care expenses, including expenses that may not be covered by traditional health insurance. For example, HSAs may be used for vision and dental services, prescription drugs, over-the-counter drugs, long-term care services and certain health insurance premiums in retirement.

Who is eligible to open an HSA?
HSAs are open to anyone who:

• Is covered under a qualifying high deductible health plan.
• Is not covered by any other heath plan that is not a high deductible health plan (with some exceptions)
• Is not entitled to benefits under Medicare (generally, has not yet reached age 65), and
• May not be claimed as a dependent on another’s tax return

A HSA qualified high deductible health plan must have a minimum deductible of $1,000 for single (self-only) coverage and $2,000 for family coverage (2005). Out of pocket expenses must be limited to $5,100 for single coverage and $10,200 for family coverage (2005). The plan may provide first dollar coverage for preventive health.

You cannot be covered by any other health insurance that reimburses you for health expenses you incur, unless it is another HSA qualified high deductible health plan. However, the maximum annual contribution to the account remains in force.

Who can contribute to my HSA?
Contributions may be made by the individual, an employer or a family member.

How much can be contributed to an HSA?
The annual HSA contribution is limited to the amount of your health plan’s deductible, subject to a cap of $2,650 for single coverage and $5,250 for family coverage (2005). Individuals over age 55 can make additional catch-up contributions until they enroll in Medicare.

Is the money I contribute to my HSA tax free?
Amounts contributed to an HSA, interest earned on the account and amounts used to pay eligible expenses are not taxed. However, amounts used to pay non-eligible expenses are taxed and may result in additional penalties.

What are eligible health care expenses that can be paid from my HSA?
An HSA may be used to pay for the diagnosis, cure, mitigation, treatment or prevention of disease; prescription and over-the-counter drugs; qualified long-term care services and insurance costs; COBRA coverage, qualified Medicare expenses (but not Medicare Supplement insurance); qualified health insurance costs for retirees; and more.

What happens to my HSA if I change jobs?
You may take an HSA with you when you leave your employer.

Where can I find a high deductible health plan in Michigan?
Information on where to find a high deductible health plan in Michigan can be found on the HSA Insider website at www.hsainsider.com/find_insurer.asp

Who can open an HSA account for me?
Information on who can open an HSA account can be found on the HSA Insider website at www.hsainsider.com/BuildHSA.asp.

Where can I go to find more information on HSA’s?
Additional information on HSAs is available on the U.S. Department of Treasury website at www.treas.gov/offices/public-affairs/hsa/, or on the IRS web site at www.irs.gov/pub/irs-drop/n-04-2.pdf. Supplementary publications and information may also be found by visiting the following links:

• The HSA Coalition at www.hsainsider.com
• HSA Road Rules, 2nd Edition at www.hasinsider.com/download_form.asp.
• Health Savings Accounts at a Glance, American Medical Association at www.hsainsider.com/AMAhsabrochure.pdf