What is an HSA?
How do I contribute to an HSA?
For 2008
What do I do with funds deposited into my HSA?
What are the tax implications of an HSA?
What happens to the HSA if I terminate my health insurance plan?
Where can I learn more about Health Savings Accounts?

What is an HSA?

• A tax-advantaged savings account that you can use to pay for qualifying medical expenses
• A portable account that you maintain as you move from job to job and project to project
• A supplement to a high-deductible health plan

• The law limits how much you can deposit into your HSA each year
• In 2007, individuals cannot deposit more than $2,850, and families cannot deposit more than $5,650.
• If you deposit more than allowed, you must withdraw the amount over the limit, plus any earnings on that amount, before April 15th of the next year
• If you don't withdraw the amount over the limit, you will be taxed 6 percent on that amount and its earnings
• Anyone can put money into your account - you, family members, employers - but once in the account, the money belongs to you and you receive both the gained interest and the tax benefit on those contributions
  
• A one-time FSA/HRA/IRA rollover can be made into an HSA. You can only rollover the maximum contribution for that year.
• Individuals can contribute the maximum amount of yearly savings even if their deductible is not that high. For instance, a family with a deductible of just $2,000 can still put in the maximum of the $5,650; plus a catch-up provision of $800 for those over 55 years.

For 2008

• In 2008, individuals can deposit $2,900, families can deposit $5,800.
• The 2008 catch-up contribution, for those over 55 years old, is $900.

• Withdraw money immediately for qualified medical expenses as recognized by the IRS
• Allow them to accumulate interest or dividends for spending in future years
• Invest them or keep them in a traditional bank account; either way, any gains accumulate tax-free and tax-deferred until your retirement, death, or disability
• There are no restrictions on how large the balance can grow as you make deposits and earn interest and dividends from year to year

• You can deduct your HSA deposits on your income taxes, even if you don't itemize and even if the deposits are made by someone else
• Individuals who obtain a qualifying insurance plan in mid-year are able to take the full yearly deduction.
  
• If you take money out of your HSA to pay for something other than medical expenses before you turn 65, the amount withdrawn is taxed and you pay a 10 percent penalty on it
• After age 65, any money you withdraw and use for non-qualifying expenses is taxed at the normal rate for investment income
• Money used for qualifying medical expenses later in life - such as nursing home costs - can still be withdrawn tax-free
• Learn more about the expenses that the IRS allows you to pay for with money from your HSA
  

• If you terminate your insurance plan, you can still keep your Health Savings Account
• Funds remaining in your account will continue to accrue interest
• You can continue to save the money in your account or use it to pay for qualified medical expenses
• You cannot make any further deposits to your HSA until you enroll in a new HSA qualified high deductible health plan

• IRS Publication 969 explains the rules regarding HSAs
• For FAQs about HSAs visit the U.S. Treasury