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Healthy Blue HSASM – features

Here is a basic list of the HSA features and options:

  • HSA money is the employee's, even if he or she changes jobs.
    • Funds are usable for qualified medical expenses. Using the funds for non-qualified expenses is taxable with a 10 percent penalty (exceptions: beneficiary's death, disability or reaching age 65). Employees are responsible for knowing what constitutes a "qualified medical expense."
    • Funds are also usable for qualified medical expenses of a employee's spouse and dependents.
  • Money rolls over year to year: Money in an HSA is not forfeited at year-end — it continues to earn interest tax-deferred.
  • Anyone can contribute to an HSA: You, the employee (even if he or she is no longer with the company and unemployed or self-employed) or any other person. Contributions (up to maximum yearly allowance) are 100 percent tax-deductible.
  • Maximum contributions (for 2010): $3,050 for individuals with self-coverage, $6,150 for families; catch-up contribution for individuals 55 and older is an additional $1,000 for 2009 (and each year going forward).
    • The employee is responsible for being aware of contribution limits.
    • Excess contributions incur a six percent excise tax for each taxable year.
    • Excess money removed before tax deadline is treated as taxable income but avoids the excise tax.
    • Prorated contributions: Allowable contributions to an HSA are prorated by 1/12 x maximum contribution x number of months of plan coverage.
  • Reporting: Your contributions must be reported on the employee's W-2 Form, and contributions must be comparable for all employees (same dollar amount or percentage of deductible).
  • Deductible: Once met, the health plan starts paying. No claims are paid until the entire family deductible is satisfied. No fixed-dollar copayments. Preventive care is one exception to these guidelines. (See below.)
    • Minimum deductible (2010) is $1,200 for individuals and $2,400 for families
    • Out-of-pocket maximums (2010): $5,950 for individuals and $11,900 for families
  • Robust incentives: You may contribute funds as an incentive for employees meeting certain criteria such as wellness goals (e.g., completing a smoking cessation program, completing a health assessment).
  • IRA rollovers: A direct trustee-to-trustee transfer is allowed once per lifetime, limited to the maximum HSA yearly contribution. In addition, the employee must maintain a high-deductible health plan for 13 months after the transfer or incur a tax penalty.
  • HSA-to-HSA rollover: All funds in an HSA may be withdrawn and rolled into another HSA within 60 calendar days of fund receipt. Only one rollover is allowed every 12 months. In addition, the employee must maintain a high-deductible health plan for 13 months or incur a tax penalty.
  • HSA debit cards: Visa® debit cards are available to employees for qualified medical expenses.
  • Retiree HSA: After an employee turns 65, the HSA may be used for the following:
    • Payment of eligible medical expenses until enrolled in Medicare.
    • Payment of eligible expenses and premiums for Medicare Part A and B, Medicare HMO, retiree premiums and non-medical expenses (which are taxed at normal rate).