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Health Savings Accounts (HSAs)

Recently approved by the U.S. Congress, a health savings account (HSA) is the newest way to help you manage health care costs and save for future qualified medical expenses. An HSA is an interest-bearing tax-exempt savings account that’s coupled with an economical, HSA-qualified high-deductible health plan (HDHP). HSAs provide you with more control over your health care dollars.

HSA Basics

You may use the HSA to pay for qualified medical expenses now and after retirement for you, your spouse and qualified tax dependents.

HSAs are tax-deductible, interest-bearing accounts that permit unused funds to carry over from year to year, even if you change employment.

Contributions, withdrawals to pay for qualified medical expenses and interest earned on contributions are tax-free up to the amount set by federal law.

The account is permanent — all money and interest earned belong to you.

Contributions

You and other individuals may make tax-advantaged contributions, up to certain limits, to your HSA.

If you’re under age 65, you are eligible to contribute to an HSA if:

• You are covered by a qualifying high-deductible health plan (HDHP);


• You are not entitled to Medicare;


• You are not eligible to be claimed as a dependent on someone else’s tax return; and


• You do not have other health insurance (except coverage such as dental, vision and disability).


• If you’re over age 65 and not eligible for Medicare or not enrolled in Medicare Part A or Part B, you’re still eligible to establish or contribute to an HSA.


• For 2013, annual contributions may be made up to 100 percent of the HSA-qualified health plan deductible, limited to $3,250 for a self-only policy and $6,450 for a family policy (compared to $3,100 and $6,250 in 2012). The maximum annual out-of-pocket limits for individuals is $6,250 and for families is $12,500 (compared to $6,050 and $12,100 in 2012).


• Individuals between the ages of 55 and 65 and over age 65 who are not entitled to Medicare may make additional “catch-up” contributions of up to $1,000 annually in 2009 and thereafter.

What kind of tax savings are possible with an HSA?

The following scenario illustrates potential federal tax savings for an individual who makes the maximum amount of contributions to a qualified HSA plan in 2012, when income tax is paid at various rates.

Total Yearly HSA Contributions	Tax Rate	Potentional Federal Income Tax Savings
$3,250	35%	$1137
	33%	$1072
	28%	$  910
	25%	$  812
	15%	$  487

Important: This is just an illustration; we do not provide tax advise and urges all individuals to seek guidance from a qualified tax advisor to determine their specific savings potential.

Distributions

HSA distributions are tax-free if they are used to pay for qualified medical expenses. Effective January 1, 2011: Distributions made for any other purpose are subject to income tax and a 20% penalty. Also over-the-counter medicines and drugs will no longer be considered a qualified medical expense.

Once a person is 65 years old, the money may be used to pay for medical expenses and certain insurance premiums, such as Medicare Parts A, B and D, Medicare HMO, and an employee’s share of retiree medical insurance. Distributions may also be made for non-qualified medical expenses without the 10 percent penalty.

Custodian and Financial Services Provided by Mellon Trust

Anthem Blue Cross (for example) has aligned with Mellon Trust of New England (or you can choose another financial institution) to supply HSAs to members. Mellon Trust offers a Visa^® debit card for easier access to the funds in your HSA, check-writing availability, online account management services and other investment options. After July 1, 2005, HSA accountholders may invest in various mutual funds offered by Mellon Trust. Account holders must have at least $2,000 in their HSA for transfer into an investment account.

How It Works

• 1. APPLICATION/ENROLLMENT:
  An individual applies for an HSA-qualified high-deductible health plan (HDHP). Or, an employer offers their employees the option of enrolling in an HSA-compatible HDHP. The individual or employee is enrolled in the HDHP.



• 2. OPEN HSA:
  The individual or employee opens an HSA at a qualified bank or financial institution. We do not administer the HSA but companies like Mellon Trust can supply HSAs to members.



• 3. CONTRIBUTIONS:
  The individual, employer and/or the employee make contributions up to an annual maximum. Employee contributions are tax-deductible on their annual return and employer contributions are exempt from federal employment taxes (e.g., income, FICA, FUTA).



• 4. PAY FOR EXPENSES:
  The individual or employee withdraws money from the account to pay for qualified medical expenses, such as plan deductibles and necessary medical services not covered by the plan.
  
  
  Example: You may use your Mellon Trust HSA debit card or personal check* to pay for qualified medical expenses. Mellon Trust will provide a monthly statement for your HSA account.



• 5. UNUSED BALANCES:
  At the end of the year, unused USA funds roll over to the following year. In the event that an individual or employee terminates the HDHP coverage, the HSA is theirs to own and take with them. Contributions to the HSA would not be permitted when their is no qualified HDHP coverage, but funds can still be withdrawn from the HSA tax-free for qualified expenses.

        * Check processing fees may apply.

You will receive details about setting up an HSA with Mellon Trust upon approval of your enrollment in an HSA-qualified HDHP.

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Important Disclaimer:  Answers and comments provided above are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, governmental, or other professional advice. We do not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service, health plan, or service provider mentioned or any opinion expressed in the website.  Replies, comments, or information gathered on Barricks.com  website may not be accurate but are intended to be helpful.