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What is a Health Savings Account (HSA)

• A Health Savings Account (HSA), in conjunction with a compatible high-deductible health plan, is a new way to secure more affordable health coverage for you and your family while you save on taxes
• Eligibility requires that you are covered by a high deductible health plan (HDHP) and are not enrolled in Medicare
• Annual contribution limits are determined by the IRS and are subject to change annually. The 2008 contribution limits are:
  • Singles - up to $2,900
  • Family - up to $5,800
  • Catch up provision for age 55+, $900 per account holder
• Contributions are tax exempt
• Interest earned on the HSA is tax exempt
• Withdrawals are tax exempt for qualified medical expenses

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Who Should Have a HSA

• Individuals or families enrolled in a HDHP
• Employees of Businesses that offer a HDHP
• Individuals who want to build a savings account tax exempt
• Individuals preparing for retirement and future medical expenses
  • Account can be used for eligible Medicare expenses. Medicare deductibles and Parts B & D premiums can be paid from the account
• Individuals who want to pay a smaller medical insurance premium
• Taxpayers who want to reduce their Federal and State income taxes

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What are the Advantages of a HSA

• Employee contributions through payroll withholding are pre-tax
• Account balances carry over from year to year
• Additional contributions deposited into the account are tax deductible
• Withdrawals for eligible medical expenses are tax exempt, including medical, dental, and vision
• Withdrawals for non-medical reasons are allowed but are taxable and subject to a 10% penalty for those under age 65
• No minimum contribution required to open a HSA

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Why Should a Business Consider a HDHP

• To save money. Generally premiums for high deductible plans are less than traditional medical plans. Savings can range from 10% - 30%
• HDHP’s provide catastrophic coverage
• Employees are more aware of the true cost of healthcare, creating a better educated consumer
• Promotes healthier lifestyle. It rewards employees who take control of their health and well-being thereby reducing their out-of-pocket medical expenses
  
  

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Central Virginia Bank’s HSA Details

• Account is an interest bearing Checking Account
• Accessible by Debit Card
• Checks available upon request
• $20 set-up fee
• $3.50 monthly maintenance
• FDIC insured

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IRS Eligibility Issues

• Individuals are not eligible to open a HSA if their medical coverage is provided by Tricare or Medicare
• Individuals are not eligible to open a HSA if they are covered by their spouse’s non HDHP medical plan
• Individuals cannot participate in a Flexible Spending Account (FSA) and a HSA account both in the same year. (Dependant Care FSA is allowed)

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Contact Central Virginia Bank for assistance in understanding and establishing a Health Savings Account for you or your company and its employees. Call (804) 403-2060