The Medicare Prescription Drug Improvement and Modernization Act of 2003 Title XII establishes HSAs.

HSAs are tax-advantaged savings accounts that can be used to pay for medical expenses incurred by individuals, their spouses and dependents.

HSAs may be offered under a cafeteria plan.

 

Note: a list of qualified medical expenses, IRS Publication 502,  is attached in our forms section.

MSA eligibility is restricted to employees of small businesses and the self-employed. HSAs are open to anyone with a qualified high deductible health insurance plan. 

 

For 2010: The minimum deductible for single is $2,000, maximum is $3,000. For family, the minimum is $4,050, the maximum $6,050.

The out of pocket maximum for single is $4,050 and for family $7,400.

 

For 2009: the minimum deductible for single coverage is $2,000, maximum $3,000. For family, the minimum is $4,000, maximum $6,050.
The out of pocket maximum for single only is $4,000, for family $7,350.

 

No. Typically there is at least a 30 day lag from the effective date of the health plan and the set up of the HSA account.

Note: The HSA account may only be set up for the first of the month, so for example of the health plan is effective 7-15, the HSA would likely not be set up until 9-1.

Currently, guidance directly from the IRS does not define the term "established" in the context of HSA accounts. However, they suggest that by using the basic principles of trust law, a trust is not "established" until it is funded.  Until further guidance is distributed, the HSA account should be funded to be considered established. This would therefore mean that claims incurred between the effective date of the high deductible health plan and the funding of the HSA cannot be paid with HSA funds.

Example: health plan is effective 7-1-2005. The HSA Bank Account is set up 9-1-2005. The HSA account is funded 12-1-2005. Claims incurred 7-1 thru 11-30-2005 cannot be paid with HSA funds.

Someone who has a qualified high deductible health plan (HDHP)(qualified means compatible with an HSA plan and is inflation adjusted every year per IRS guidelines).

 

No other health coverage in place except Workers' Compensation, specific disease or illness, accidents, dental care, vision care, long-term care.

 

Not enrolled in Medicare (can be eligible for Medicare).

 

Cannot be claimed as a dependent on someone else's tax return.

 

Self-employed, partners and S-Corporation shareholders (including their spouses and family members) are not generally considered employees and cannot receive pre-tax employer contributions to their Health Savings Accounts. Self-employed can only take an above-the-line deduction for their premium and HSA contribution.
Regardless of how the S-Corporation or LLC is structured, the company cannot make pre-tax contributions to owners, shareholders, or partners

Contributions by the employer are not included in the individual's taxable income. Contributions by an eligible individual are tax deductible. Contributions by family members of an eligible individual are deductible by the eligible individual.

For 2010, the minimum deductible  for self-only will be $1,200 (up $50 from 2009) and $2,400 (up $100 from 2009) for family.

The maximum contribution is $3,050 (up $50) for self-only and $6,150 (up $200) for family.
The maximum out of pocket is $5,950 (up $150) for self-only and $11,900 (up $300) for family.

The catch up contribution for those 55 or older is $1,000 (same as in 2009).

For 2009, the minimum deductible is $1,150 for self-only and $2,300 for family.

The maximum contribution is $3,000 for self-only and $5,950 for family.
The maximum out of pocket is $5,800 for self-only and $11,600 for family.

The catch up contribution for those 55 or older is $1,000.

 

For 2008, the minimum deductible was $1,100 for self-only and $2,200 for family (no change from 2007).

The maximum contribution was $2,900 for self-only and $5,800 for family.

The maximum out of pocket was $5,600 for self-only and $11,200 for family.

The catch up contribution for those 55 and older is $900.

 

Important changes effective January 1, 2007:

Individuals age 55 and older can increase their contribution by $1,000 from 2009 and beyond.

An item or service or prescription drug that satisfies the criteria for Preventive Care may be covered under an HDHP (High Deductible Health Plan), even if the individual has not satisfied the minimum deductible requirements.

Medications may be deemed preventive when taken to prevent the manifestation of a condition by an individual who has developed risk factors which have not yet manifested or to prevent recurrence of a disease from which the person has recovered. An example of this might be the use of statins to lower cholesterol, but not those to treat an existing heart problem.

Once the money is in the account, regardless of who deposits the money, it belongs to the employee.

Several key points are:

*  persons enrolled in Medicare can no longer contribute to their HSA fund

*   although an individual state may recognize Domestic Partners and Civil Union Partners, they are not recognized by the Federal Government or the DOL (Department of Labor) for the purposes of HSA contribution or COBRA continuation

*  the employee contribution can be pre-tax as long as the employer is offering a cafeteria plan

*  typically the deductible is "aggregate" meaning that until the  full  family deductible is satisfied, no one in the family is in benefits. However, some carriers may have filed with the NJ Department of Banking & Insurance for different calculations.

*  incurred claims can only be paid with HSA funds after the bank account has been set up and funded (a minimal amount is sufficient to fund)

* the IRS "inflation adjusts" the deductible, contribution, and maximum out of pocket amounts by June 1 every year (effective as of January 1, 2007).

*  preventive care and medication can be covered first dollar

* persons enrolled as of 12-1 may contribute the full year but must remain eligible and enrolled in a qualified HDHP for the ensuing 12 months.  A 12-15 effective date does not satisfy this rule.

* possible tax implications if the deductible accumulates for over a 12 month period which may happen if the employer changes from a plan year to calendar year cycle.

No.  Although an individual state may recognize and permit Domestic Partners and Civil Union Parnters to be covered as a spouse for the health plan, neither of these partnership arrangements are recognized by the Federal government as a spouse.

HRA is considered a health plan for groups and plans subject to Federal COBRA. An HSA which is an account is never a health plan. The high deductible health plan would be eligible for COBRA but not the savings account.

HRA is not considered a health plan for groups or plans subject to state continuation.

COBRA and health insurance premiums for individuals receiving Unemployment Compensation. Premiums of the account holder and any dependents may be paid from HSA funds.  The only health insurance premiums tied solely to the account beneficiary are those insurance premiums for post 65 coverage.   

Aetna - New business is placed with Health Equity as the HSA administrator for small group. Existing small group can remain with JP Morgan.

HSA-Compatible plan groups can now move to HealthEquity for administration of the Aetna HealthFund HSA upon plan renewal.

JP Morgan will remain the banking arrangement for 51+ employers.  Their HRA administrator is Flexible Service Benefit Corporation.

The NY plans use plan year.

For NJ small group, effective 8-1-2009, group HMO and POS HSA Compatible may elect a "Plan Year". 
Rates will be the same for both Plan and Calendar year.

AmeriHealth - small and large in NJ (Bancorp Bank). Uses calendar year deductible calculation.

CIGNA - small group in NJ, NY and CT. Available currently in NJ large group (JP Morgan Chase).

CIGNA uses plan year for deductible calculation for HSAs.

EmblemHealth uses plan year for deductible. They will accommodate calendar year if the group is coming from a calendar year plan. Deductible will be credited.

First HSA Bank.

Health Net - small and large group uses Bank of America. Plan/policy year deductible for HSA plans only. Health Net may permit HSA to be written with calendar year deductible in special circumstances and subject to Healthnet's underwriting approval. Contact your Savoy sales team. 

HRA - NJ and NY.

Horizon BCBSNJ - small and large in NJ and NY (Mellon Bank). Horizon uses calendar year calculation for deductible for all plans.

Oxford - small and large in NJ and NY OptumHealth Bank. Oxford uses calendar year calculation for deductible for all plans. As of June 1, 2009, the employer may elect plan year deductible.

IBC -IBC offers a contract year benefit period as a standard election for Personal Choice® HSA-qualified HDHPs for the 2-99 market in Pennsylvania. This election is available for both new businesses with 2-99 eligible members and existing businesses with 2-99 contracts enrolled.

IBC uses The Bancorp Bank.

You may email the U.S. Treasury direct at

hsainfo@do.treas.gov .

An excellent source of information is IRS publication 969 which is also in our forms section. Or you may call your dedicated Savoy Account Executive or Joan Fusco, our Director of Research & Education. Her cellular number is 848-391-3700.