Healthcare Savings Account Flashcards
Health Savings Account (HSA) Definition
A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.
By using untaxed dollars in a Health Savings Account (HSA) to pay for
- deductibles
- copayments
- coinsurance
- and some other expenses
you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.
HSA are fully portable, and assets can accumulate over the years. Upon death, HAS ownership may be transferred to a spouse tax free.
Eligibility
- Individuals < 65
- have a High Deductible Health Plan (HDHP), generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible.
- For plan year 2020, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.”
Contribution Limits
- For 2020, if you have an HDHP, you can contribute up to $3,550 for self-only coverage and up to $7,100 for family coverage into an HSA.
- HSA funds roll over year to year if you don’t spend them.
- An HSA may earn interest or other earnings, which are not taxable.
(https: //www.healthcare.gov/glossary/health-savings-account-hsa/)
* Individuals >55, but <65 can make additional catch-up contributions
Tax Treatments
- The owner decides which type of investment is used in the HAS and earnings grow tax-free
- Withdrawals are tax-free to cover current and future qualified health care costs
Qualified Healthcare Expenses
Qualified health care expenses include:
- Doctors’ fees
- Prescription & non-prescription medicines
- Necessary hospital services not paid for by insurance
- Retiree health insurance premiums
- Medicare expenses (but not Medigap)
- Qualified long-term care services
- COBRA coverage
Qualified medical expenses are expenses incurred by the HSA owner, the spouse, and dependents.
Nonqualified Withdrawals
Subject to income taxes and a 200% penalty
