Health Savings Account (HSA)

An HSA is established for the purpose of paying for qualified medical expenses not covered by a High Deductible Health Plan (HDHP).

High Deductible Health Plan (HDHP)

A health plan is considered an HDHP if the plan satisfies the following annual deductible and out-of-pocket expense requirements for single or family coverage.

Tax Benefits of an HSA

Health Savings Accounts can provide significant tax benefits to eligible individuals. The premise behind an HSA is to combine a qualified High Deductible Health Plan (HDHP) with a tax-favored Health Savings Account to access affordable health care premiums, while taking a reduction in your taxable income.

Health Savings Accounts Offer Triple Tax Savings:

• Tax-Deductible Contributions
• Tax-Deferred Growth
• Tax-Free Withdrawals

Tax-Deductible Contributions

A Health Savings Account is like an IRA account that is designated exclusively for covering qualified medical expenses incurred by the account beneficiary (the person who establishes the account) and his or her dependents.

Tax-Deferred Growth

HSA funds grow without being subject to taxes unless they are used for non-eligible medical expenses. However, if used for qualified medical expenses the funds may be withdrawn tax-free.

Tax-Free Withdrawals

Funds grow on a tax-deferred basis, and if the funds are used for eligible medical expenses, they are tax-free. Like many retirement accounts the funds roll over from year to year (no "use it or lose it" rules), and funds used after age 65 are able to be used tax-free for eligible medical expenses or at an individual's normal tax rate for other purposes.

*Your 1099SA is mailed by January 31 and your 5498SA is mailed out by May 31 each year.

**Representatives from Choice Financial cannot give tax advice under any circumstance.  Please consult your tax advisor for any information regarding your personal tax situation.

Employer Benefits

• Contributions are excluded from the company’s gross income.
• Contributions are not subject to withholding for income tax.
• Contributions are not subject to other employment taxes.
• Additional benefit offering to help you retain quality employees.

Eligibility Requirements

Any individual who:

• Is covered under a High Deductible Health Plan (HDHP).
• Is not covered under any other health plan other than the HDHP.
• Is not enrolled in Medicare (typically age 65).
• Is not claimed as a dependent on someone else's tax return.

2010 IRS Requirements