Health Savings Accounts for Small Business Owners and Employees

TO USE OR PRINT this presentation click : http://videosliders.com/r/1248 ============================================================== Health Savings Accountsfor Small Business Owners and Employees U.S. Small Business Administration, and Department of the Treasury Washington, DC 2008 ,HSA Overview What is a Health Savings Account? A tax preferred account owned by an individual and used to pay for current and future medical expenses. HSAs are used in conjunction with an HSA-eligible Health Plan HSAs are funded by deductible individual contributions. In addition, employers may contribute to employees’ HSAs. ,Advantages of an HSA Ownership - Account funds remain from year to year (similar to an IRA). There are no ‘use it or lose it’ rules for HSAs. Tax Deductions – Individual contributions to an HSA are deductible even if you don’t itemize. For employers, contributions are excluded from income and wages. Savings – You can save the money in your account for future medical expenses and grow your account through tax free investment earnings. Flexibility– You can use the funds in your account to pay for current medical expenses that your insurance plan may not cover, or choose to save the money for future needs, such as: Health insurance or medical expenses if unemployed Medical expenses after retirement (before Medicare) Out-of-pocket expenses when covered by Medicare Long-term care expenses and insurance ,Advantages of an HSA Portability – You can keep you HSA even if you change jobs, change medical coverage, or become unemployed. HSAs are an inheritable asset. Affordability – You should be able to lower your health insurance premiums by switching to higher deductible coverage. Security – Your HSA eligible insurance and HSA protect you against high or unexpected bills. Control – You make all the decisions about: how much you contribute whether to pay current expenses with the account or save for future expenses which medical expenses to pay for with the account which company will hold the account investing decisions for the money in the account. ,Who Is Eligible for an HSA? Any individual that: Has an HSA eligible health plan Is not covered by other health insurance, with a few exceptions: Insurance for a specific disease/illness, accident, disability, dental, vision and long-term care Employee Assistance Programs, disease management program or wellness program that do not provide significant health benefits Drug discount cards Eligibility for VA Benefits (Unless you have received VA health benefits in the last 3 months) Is not enrolled in Medicare Can’t be claimed as a dependent on someone else’s tax return No limits exist on income for who may contribute to an HSA No requirement exists for having earned income to contribute to an HSA ,What Is an HSA Eligible Plan? The following table shows the minimum annual deductible and out-of-pocket expenses for HSA eligible plans for 2008 and 2009. Plans may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible. Examples include, but are not limited to: Periodic health evaluations and immunizations Routine prenatal and well child care Tobacco cessation and obesity weight-loss programs. Plans can have higher out-of-pocket for non-network services All covered benefits must apply to the plan deductible, including prescription drugs ,HSA Contributions Contributions made by an Employer: Are excludable from the employee’s wages and not subject to FICA or other federal taxes, and in most cases, state and local taxes Are not taxable to the employee (excluded from income and wages) Must be “comparable” for all employees participating in the HSA, else there will be an excise 35% tax Contributions made by an Individual: Are an “above-the-line” deduction Can be made by others on behalf of the individual and deducted by the individual Individuals can make a one-time transfer from their IRA to an HSA, subject to the contribution limits applicable for the year of the transfer Maximum contribution for 2008 is $2,900 for in

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