Health Savings Accounts - HSAs
The increasing cost of health care is becoming a financial burden for many employers and employees. As an alternative, some individuals are seeking a low-cost, low-premium health plan option that helps protect against high medical bills. Adding a health savings account (HSA) to your benefits package may be just what your employees are looking for.
HSAs are interest-bearing savings tools with many features similar to IRAs, but give your employees the opportunity to pay their medical expenses with tax-free money. Employees generally are eligible for an HSA if they are covered by a high deductible health plan (HDHP), not covered by any other health plan (with limited exceptions), not enrolled in Medicare, and not eligible to be claimed as a dependent on another person's tax return.
High Deductible Health Plans
An HDHP is HSA-compatible is an affordable approach to health care for many employers and their employees. HDHPs have higher deductibles and out-of-pocket expense limits than traditional health plans, but cost less, and give employees more control over their health care costs. Under HDHPs, insured individuals generally pay the expenses for more simple medical procedures, but the plan covers the bulk of higher cost emergency or complex medical procedures. An HDHP is HSA-compatible if it satisfies the annual deductible and out-of-pocket expense requirements.
For self-only coverage during 2013, the annual deductible must be at least $1,250 and the annual out-of-pocket expenses (deductibles, co-payments, and payments other than premiums) cannot exceed $6,250. For family coverage during 2013, the annual deductible must be at least $2,500 and the annual out-of-pocket expenses cannot exceed $12,500.
Using the HSA
HSA owners have complete ownership and control of their HSAs and can take their money out at any time. HSA distributions are only tax-free, however, when used to pay qualified medical expenses for the HSA owner, a spouse and any dependents, as permitted under federal tax law. If not needed for medical expenses, the HSA assets can be saved for retirement. Otherwise, HSA distributions not used for qualified expenses are subject to ordinary income tax and a 20 percent IRA penalty tax if taken before age 65 (unless due to death or disability).
HSA/HDHPs are not for everyone, but with the rising cost of health care and health insurance, they are becoming a viable solution for more and more people. Consult with an attorney or a competent business advisor to determine if the HSA/HDHP alternative is right for your business.
HSAs at NuMark Credit Union
There are no fees to open an HSA at NuMark Credit Union and they come with a Visa Debit Card for your convenience.
For more information call 815-729-3211 or send us an email.