Frequently Asked Questions for HSA

Q. What is a Health Savings Account?
A.  A Health Savings Account is a custodial account that individuals covered by high-deductible health insurance plans can set up to pay medical expenses.  (Health insurance premiums does not qualify as a reimbursable expenses from this account.)  The contributions to the HSA come out of an individual's paycheck on a pre-tax basis.  Any interest the account earns is tax-deferred, and the funds can be withdrawn tax-free at any time to pay medical expenses.

Q.  Can I determine how much I want to contribute to the HSA each year?
A.  The IRS limits how much a person can contribute to the HSA each year.  For 2016, the limits for an individual is $3,350 and a family is $6,750.  For anyone age 55 or older, you may make a catch up contribution of $1,000.

Q.  Does the HSA function under the same "use it or lose it" rule?
A.  No.  Unlike the Flexible Spending Account, the Health Savings Account is your own personal account that may role over year after year. 

Q.  If I still have money in my FSA that rolls over into the next year, can I also have an HSA and make contributions into that plan?
A.  No. The IRS states that if you have money that rolls into the next plan year, you must wait until the grace period of March 15th ends before you can open your Health Savings Account - even if you only have a very few dollars left in that account.  So you will want to be sure you use up all your money in the FSA before 12/31/15 if you want to start a Health Savings Account at the beginning of 2016.  If you only have a few dollars left at the end of the year, you may want to purchase over-the-counter items such as band-aids or first aid creams to zero out the flexible spending account. 

Q.  Can I start and stop my contributions in my HSA anytime during the year?
A.  Yes. Since you are setting up your own individual health savings account, you can stop or start your contributions anytime, as well as change your contribution amounts up to the annual limits. 

Q.  Do over-the-counter medicines and supplies qualify under the Health Savings Account?
A.  Over-the-counter medicines can only be purchased with a prescription. However, medical supplies such as crutches, walkers, bandages, diagnostic devices such as blood sugar test strips will qualify for reimbursement.  

Q.  I understand that if I have a Health Savings Account I can use it to pay my medical expenses for me if I am enrolled in a high deductible plan.  But if my spouse is enrolled in a Medicare plan, can I use the HSA money for my spouse?
A. Yes, an employee who has contributed to a validly-established HSA may use it to reimburse qualified medical expenses for any dependents claimed on their tax return. 
 
Q.  If I am enrolled in a Health Savings Account and then I retire and take the retiree Heath Reimbursement Account, can I still have access to my balance in my HSA and be enrolled in the HRA at the same time?
A.  Yes.  The HSA is an individual savings account belonging to the retiree which will not be impacted by the retiree's enrollment in or access to the HRA.  One difference with the HRA is that this money can be used to pay health insurance premiums.

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