Health Savings Accounts (HSAs)
Frequently Asked Questions (FAQs)
Q: Who is eligible to participate?
A: Health Savings Accounts (HSAs) are available
to individuals covered by a high deductible health plan (HDHP)
regardless of whether the person is self-employed or employed by a
large or small employer, and regardless of whether their employer
maintains the HDHP. You are eligible for any month if you meet the
following:
- You are covered under an HDHP on the first day of such month;
- You are not covered by any other health plan that is not an HDHP (with limited exceptions);
- You are not enrolled for benefits under Medicare (generally not yet age 65); and
- You cannot be claimed as a dependent on another person's tax return.
Q: What is an HDHP?
A: An HDHP (high deductible health plan) is an insurance policy that meets certain dollar limits as shown in the table below.
| 2010 and 2011 HDHP Limits* | ||||
| Year | Single Coverage |
Family Coverage |
||
| Minimum Deductible |
Maximum Out-of-Pocket |
Minimum Deductible |
Maximum Out-of-Pocket |
|
| 2010 | $1,200 | $5,950 | $2,400 | $11,900 |
| 2011 | $1,200 | $5,950 | $2,400 | $11,900 |
Q: What are qualified medical expenses?
A: In order for HSA assets to retain their tax-free status, they may only be withdrawn and used for certain expenses, including:
- Actual medical expenses, including doctor visits, prescriptions, transportation to get medical care, and dental care
- Long-term care insurance
- Healthcare coverage when unemployed
- Certain continuation-of-benefit healthcare coverage
- Certain health insurance after age 65
Non- qualified uses of HSA assets are subject to taxation and an additional 10% penalty unless the HSA account beneficiary is age 65 or older, dies, or is disabled.
Visit the IRS online for more information about qualified medical expenses or seek advice from your tax consultant.
Q: What are the HSA contribution rules?
A: The total amount you or your employer may
contribute to an HSA for any taxable year is dependent upon whether you
have individual or family coverage under a high deductible health plan
(HDHP) as shown in the table below.
In addition to the standard HSA contribution limits shown in the table, if you have attained age 55 before the close of a taxable year, you may also contribute an additional amount known as a “catch-up” contribution.
| 2010 and 2011 HSA Contribution Limits* | |||
| Year | Single Coverage | Family Coverage | Over 55 Catch-Up Contributions |
| 2010 | $3,050 ($254.17) | $6,150 ($512.50) | $1,000 ($83.33) |
| 2011 | $3,050 ($254.17) | $6,150 ($512.50) ) | $1,000 ($83.33) |
Q: What happens if you don’t use the money in an HSA by the end of the year? 
A: Unlike flexible spending account
contributions, the balance of an HSA carries over at the end of the
year, so you won’t lose the money if it’s not spent on qualified
medical expenses.
Q: Where can I find concise information about HSA's?
A: Find a downloadable brochure on Health Savings Accounts .
Find out if you can benefit from an RCU health Savings Account. Contact us today: (800) 479-7928 or visit an RCU branch.
The information on this page is provided by BISYS Retirement Services and the IRS, and is not intended as tax advice. Please consult a tax professional.
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