Health Savings Accounts

Who can have an HSA?

Any individual can have an HSA if they:

• Have coverage under a qualified high deductible health plan (HDHP). Federal law requires that the health insurance deductible be at least:
$1,100* - Self-only coverage
$2,200* - Family coverage

• In addition, annual out of pocket expenses under the plan (including deductible, co-pay, and co- insurance) cannot exceed:
$5,500* - Self-only coverage
$11,000* - Family coverage

• Have no other first dollar medical coverage including Medicare

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

• Cannot have a flexible spending account that provides duplicate coverage.

Contributions
You and/or your employer can make a contribution to your HSA each year you are eligible. Contribution levels are determined by the IRS and are indexed for inflation. You can find current contribution limits at www.treasury.gov. Additionally, a “catch-up” of $800 contribution is available for eligible individuals who are age 55 or older by the end of their taxable year and have not enrolled in Medicare. This "catch-up" amount increases by $100 per year until 2009.

Using your HSA
You can use the money in your HSA account to pay for any "qualified medical expense." Unlike contributions to a flexible spending account, the balance of your HSA is carried over from year to year. You can use the money in the account to pay for medical expenses of yourself, your spouse, or your dependent children. You can pay for expenses of your spouse and dependent children even if they are not covered by your HDHP.

"Qualified medical expenses" include most medical care and services, dental and vision care, and also includes over-the-counter drugs such as aspirin. Funds may also be used to cover health insurance deductibles and co-payments. You can find a partial list of "qualified medical expenses" in IRS Publication 502 available at www.irs.gov. Any amounts used for purposes other than to pay for "qualified medical expenses" are taxable as income and subject to 10% tax penalty. After your turn 65, the 10% additional tax penalty no longer applies.

*amounts for 2007 and indexed annually for inflation