Health Savings Account—Frequently Asked Questions
Q. What is a high-deductible health plan (HDHP)?
A. Essentially, the HSA-qualified high-deductible health plan* is health insurance that does not cover first-dollar medical expenses. The deductible must apply to all medical costs covered by the plan, and the HDHP must have:
- A minimum deductible of $1,100** for individual coverage and $2,200** for family coverage
- A maximum out-of-pocket limit (including deductibles and co-pays) of $5,500** for individuals and $11,000** for families
*Other criteria apply. Check with you insurance provider or tax advisor to ensure that the HDHP is HSA-qualified.
**Amounts for 2007. Adjusted annually for inflation.
Q. What happens when I spend my HSA money on non-qualified expenses?
A. HSA funds used for anything other than "qualified medical expenses" are taxable as income and subject to an additional 10% tax penalty.After you turn age 65, of if you become disabled, the 10% additional tax penalty no longer applies. Please consult a tax professional.
Q. What medical expenses qualify?
A. Qualified medical expenses include:
- Most medical care and services
- Prescriptions and over-the-counter drugs, such as aspirin
- Dental and vision costs, even if they are not covered by your insurance plan
- Healthcare coverage during periods of unemployment
- Qualified long-term care insurance
Q. Who can contribute, when, and how much?
A. You or any other person, including an employer or a family member, can make HSA contributions on your behalf by the tax-filing deadline. Money can be deposited into the account each year that you are eligible, up to the amount specified by law.
Individuals age 55 and older can make additional "catch-up" contributions,
with annual maximums as follows:
- 2007: $ 800
- 2008: $ 900
- 2009 and after: $1,000
Q. Does the money in my HSA earn dividends?
A. Yes. We pay competitive rates on the account. Accounts are federally insured, and the earnings are tax-free when used to pay for medically eligible expenses.
Visit the U.S. Department of Treasury for more information on the Health Savings Account.
