What is a Health Savings Account (HSA)?
HSAs accounts are IRA-like accounts that are designed to cover medical expenses incurred by the HSA account owner and his or her dependents. HSA contributions are deductible, and if amounts are used for qualified medical expenses, distributions of basis and earnings are tax-free. An HSA is a checking account vehicle.
Who is eligible to establish an HSA?
Any eligible individual may establish an HSA. An eligible individual (determine on a monthly basis, on the first day of the month) is an individual that is:
- Covered under a High Deductible Health Plan (HDHP)
- Generally not covered by any health plan that is not an HDHP
- Not enrolled in Medicare Part A and/or Part B
- May not be claimed as a dependent on another person's tax return
What is considered an HDHP?
Single Coverage
- Annual deductible of at least $1,100 for 2007
- Out-of-pocket expense cap not to exceed $5,500
- Contributions up to $2,850.00 for 2007 (if age 55 but have not yet reached 65 $800.00 for catch-up contributions)
Family Coverage
- Minimum annual deductible of at least $2,200 for a family
- Out-of-pocket expense cap not to exceed $11,000 for a family
- Contributions up to $5,650.00 for 2007 (if age 55 but have not yet reached 65 $800.00 for catch-up contributions)
Who may contribute to an HSA?
- An eligible individual
- An eligible individual's employer
- Any other person
What are the Federal Tax benefits of an HSA?
100% of your contribution is deductible. Furthermore, the earnings grow tax deferred and all qualified distributions are tax-free. Be sure to consult with your tax or legal professional for guidance.
Ravenswood Bank Health Savings Account
- Interest bearing checking account, which can be opened with $100.
- No monthly fees.
- Free Internet banking.
- Free Online Bill Payment.
- Free ATM/Debit Card.
- Unlimited check writing priviliges.
We recommend that you closely review all Health Savings Account documentation to insure eligibility.