Health Savings Account
Frequently Asked Questions

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1. What is a Health Savings Account (HSA)?

> What is an HSA?

A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account. You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 added section 223 to the Internal Revenue Code to permit eligible individuals to establish health savings accounts (HSAs) beginning January 1, 2004. An HSA allows individuals to pay for eligible health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. An HSA is similar to an Individual Retirement Account ("IRA"). Like an IRA, an HSA is established for the benefit of an individual, is owned by that individual, and is portable. Thus, if the individual is an employee who changes employers or leaves employment, the HSA stays with the individual. However, an IRA cannot be used as an HSA nor can you combine an IRA and an HSA in a single account.

> What is the history behind HSAs?

HSAs began as a pilot program in 1996. The early versions went by the names Medical Savings Accounts or Archer Savings Accounts. Approximately 1.5 million Americans took part in this program. By 2001, it proved to be a success, and Congress decided to open up the program further. Beginning on January 1, 2004, individuals under the age of 65, who are eligible for Medicare but who are not enrolled in Medicare Part A or B, remain eligible to contribute to an HSA if they have a High Deductible Health Plan (HDHP).
 

> Is there a chance HSAs will be repealed?

HSAs are an evolutionary step from existing government legislation creating medical savings accounts. A great deal of bipartisan thinking that has gone into the passage, by Congress and the President, of this law. Any law can be modified or repealed. If anything, it appears that lawmakers are focusing on ways to increase the tax benefits of owning HSAs (such as tax credits for employers), not limiting them.

2. How Does an HSA Affect My Taxes?

Contributions
> Who may contribute to my HSA?

id="answer2.1"> Contributions to your HSA can be made by an eligible individual, the individual's employer, the individual's family members, and any other person. Contributions made by the individual are deductible from the individual's adjusted gross income. Contributions made by the individual's employer are excluded from the individual's income and are not taxable to the individual. Contributions from all sources are aggregated for purposes of applying the maximum annual contribution limit described below.

> What is the tax treatment of my HSA contributions?

Contributions to your HSA, up to the applicable maximum contribution, are deductible from your adjusted gross income, whether or not you itemize deductions.

> What is the tax treatment of my employers' contributions to my HSA?

Employer contributions to an employee's HSA are excludable from the employee's gross income, up to the maximum contribution limit for that employee. Although the employee cannot deduct the employer's HSA contributions, the contributions are not taxable to the employee nor are they subject to withholding from wages for income tax or other employment taxes.

> Is there a deadline for contributions to my HSA for a taxable year?

Contributions for any taxable year can be made in one or more payments, at any time prior to the deadline, without extensions, for filing your federal income tax return for that year, but not before the beginning of that year. For calendar year taxpayers, this deadline for contributions is generally April 15 following the year for which the contributions are made.

> What happens when my contributions exceed the maximum amount that may be deducted or excluded from gross income in a taxable year?

An "excess contribution" (a contribution made by you or your employer that exceeds the amount allowed by law) is not deductible by you or your employer and is included in your gross income if made on your behalf by your employer. An excise tax of 6% for each taxable year is imposed on excess individual and employer contributions. If the excess contributions for a taxable year and the net income attributable to such excess contributions are paid or distributed to you before the deadline (including extensions) for filing your federal income tax return for the taxable year, then the net income from the excess contributions is included in your gross income for the taxable year in which the distribution is received. However, the excise tax would not be imposed on the excess contributions nor would the distribution of the excess contributions be taxed. Allowable rollover contributions do not count in determining whether an excess contribution has been made.

> How much can I contribute to my HSA each year?

In general, the maximum annual contribution to an HSA is the sum of the limits determined separately for each month, based on status, eligibility, and health plan coverage as of the first day of the month. Although the maximum annual contribution limit is determined on a monthly basis, there is no actual monthly limit on the amount that may be contributed. If an individual was under age 55 at the end of the year, and was an eligible individual on the first day of every month during the year with the same self-only HDHP coverage, the HSA annual maximum contribution limit is $3,250 for individuals and $6,450 for family coverage. In 2014, those limits change to $3,300 and $6,550.

> I have a very high deductible. Is there a limit on how much I can contribute?

The most you can put into your account for 2013 is $3,250 if you have single coverage and $6,450 for a family. In 2014, the limits are $3,300 and $6,550. These amounts will be increased for inflation in future years.

> Does my contribution depend on when I establish my HSA account or when my HDHP coverage begins?

An exception is provided for an individual who becomes HSA-eligible after the beginning of a taxable year who does not establish an HDHP as of the beginning of such year, generally January 1. In general, for tax years beginning after 2006, an individual who becomes covered under an HDHP in a, month other than January may be permitted to make the full HSA contribution for the year. An individual who is an eligible individual during the last month of a taxable year is treated as having been an eligible individual during every month during the taxable year for purposes of computing the amount that may be contributed to the HSA for the year. As a result, such individual is allowed to make contributions, including catch-up contributions for months before the individual was enrolled in an HDHP. If an individual makes contributions under the exception and does not remain an eligible individual during the testing period, the amount of the contributions attributable to months preceding the month in which the individual was an eligible individual, which could not have been made but for the provision, is includible in gross income. A 10 percent additional tax also applies to the amount includible. An exception applies if the employee ceases to be an eligible individual by reason of death or disability. The testing period is the period beginning with the last month of the taxable year and ending on the last day of the 12th month following such month. The amount is includible for the taxable year of the first day during the testing period that the individual is not an eligible individual.

> Do my contributions provide any tax benefits?

Your personal contributions offer you an "above-the-line" deduction. An "above-the-line" deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.

> If my employer contributes to my HSA, does that also provide me any tax benefit?

If your employer makes a contribution to your HSA, the contribution is not taxable to you the employee (excluded from income).

> Can I make contributions through my employer on a "pre-tax" basis?

If your employer offers a "salary reduction" plan (also known as a "Section 125 plan" or "cafeteria plan"), you (the employee) can make contributions to your HSA on a pre-tax basis (i.e., before income taxes and FICA taxes). If you can do so, you cannot also take the "above-the-line" deduction on your personal income taxes.
 

> Does tax filing status (joint vs. separate) affect my contributions?

Tax filing status does not affect your contribution.

> May a self-employed person contribute to an HSA on a pre-tax basis?

No. Self-employed persons may not contribute to an HSA on a pre-tax basis and may not take the amount of their HSA contribution as a deduction for SECA purposes. However, they may contribute to an HSA with after-tax dollars and take the above-the-line deduction.

Deductions
> Can I claim both the "above-the-line" deduction for an HSA and the itemized deduction for medical expenses?

You may be able to claim the medical expense deduction even if you contribute to an HSA. However, you cannot include any contribution to the HSA or any distribution from the HSA, including distributions taken for non-medical expenses, in the calculation for claiming the itemized deduction for medical expenses.

> Can I take a tax deduction for my HDHP premium?

Not at this time. President Bush had proposed allowing individuals not covered by an employer plan to deduct their HDHP premiums as well as their HSA contributions. However, this proposal was not enacted by Congress.

Special Circumstances
> I am over 55 but under 65. Are there additional advantages for me?

The government has allowed people over the age of 55 to invest more than others into their HSAs through "catch-up" contributions. This means that you are allowed to invest additional money into your HSA for 2013 and 2014 of $1000. If you turn 55 during any of the years above, you can only contribute a pro-rated amount based on the number of full months you are 55. These contributions must stop once you become eligible for Medicare.

> Is there a chance HSAs will be repealed?

HSAs are an evolutionary step from existing government legislation creating medical savings accounts. A great deal of bipartisan thinking that has gone into the passage, by Congress and the President, of this law. Any law can be modified or repealed. If anything, it appears that lawmakers are focusing on ways to increase the tax benefits of owning HSAs (such as tax credits for employers), not limiting them.

> Can I pledge any part of my HSA as security for a loan?

Any portion of your HSA that you pledge as security for a loan will be treated as a distribution for the year the pledge is made. The amount pledged is includable in your gross income and a 10% premature distribution penalty tax on the pledged amount may also be imposed.

> Will you provide tax advice in connection with my HSA?

Tax advice concerning your HSA will not be provided. It is your sole responsibility to determine the tax consequences of establishing an HSA. Please discuss any questions you may have with your tax advisor or HDHP provider agent.

> What happens if I don't use the money in the HSA for medical Expenses?

If the money is used for other than qualified medical expenses, the expenditure will be taxed and, for individuals who are not disabled or over age 65, subject to a 10% tax penalty.

> I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for medical expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

> What happens to the money in my HSA if I lose my HDHP?

Funds deposited into your HSA remain in your account and automatically roll over from one year to the next. You may continue to use the HSA funds for qualified medical expenses. You are no longer eligible to contribute to an HSA for months that you are not an eligible individual because you are not covered by an HDHP. If you have coverage by an HDHP for less than a year, the annual maximum contribution is reduced; if you made a contribution to your HSA for the year based on a full year's coverage by the HDHP, you will need to withdraw some of the contribution to avoid the tax on excess HSA contributions. If you regain HDHP coverage at a later date, you can begin making contributions to your HSA again.

> What happens to the money in an HSA after I turn 65?

You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or "Medigap" policy. Once you turn age 65, you can also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 10% penalty on the amount withdrawn.

> What happens to the money in my HSA when I die?

What happens depends on how the HSA is designed. If your spouse is designated as the beneficiary by you, your spouse becomes the owner of the HSA when you die. If you provide that it goes to your estate or other entity, the value of the HSA at death is income to the estate or other entity.

3. What is an HDHP?

> What is a high deductible health plan?

A high deductible health plan meets the following criteria: (1) For self-only policies in 2014, a qualified health plan must have a minimum deductible of $1,250 with a $6,350 max out-of-pocket expenses. (2) For family policies in 2014, a qualified health plan must have a minimum deductible of $2,500 with  $12,700 max out-of-pocket expenses. Out-of-pocket expenses include deductibles, co-payments, and other amounts the participant must pay for covered benefits, but do not include premiums for covered benefits. Generally, a plan that does not specify an out-of-pocket maximum is not an HDHP. However, if a plan is structured in such a way that the account owner would never exceed the out-of-pocket limitation, then the plan could be considered a HDHP. High deductible health plans can have first dollar coverage (no deductible) for preventive care and higher out-of-pocket expenses (copays & coinsurance) for non-network services. In order to create an HSA, you need to be covered by an insurance plan that has a deductible that is considered high. Many people already own a plan that qualifies or will do so in the near future due to the lower premiums that such plans offer. The dollar amounts described above are subject to annual cost of living adjustments beyond 2014. You must have an HDHP if you want to open an HSA. Sometimes referred to as a "catastrophic" health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn't pay for the first several thousand dollars of health care expenses (i.e., your "deductible") but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover.

> Who can offer a high deductible health plan?

A high-deductible health plan may be offered by a variety of entities, including insurance companies and health maintenance organizations (HMOs).

4. Who is Eligible?

Who is eligible to open an HSA?
> Who is eligible to open an HSA?

To be eligible for an HSA, you must:
1) Be covered by a high deductible health plan (HDHP).
2) Not be covered by other health insurance, whether as an individual, spouse, or dependent (this restriction does not apply to insurance for specified illness or disease or accident, disability, dental care, vision care, long-term care or hospitalization insurance).
3) You cannot be enrolled in Medicare or Medicaid, nor can you be claimed as a dependent on someone else's tax return.

> Does the HDHP policy have to be in my name to open an HSA?

No, the policy does not have to be in your name. As long as you have coverage under the HDHP policy, you can be eligible for an HSA (assuming you meet the other eligibility requirements for contributing to an HSA). You can still be eligible for an HSA even if the policy is in your spouse's name.

> I am a veteran. Can I have an HSA?

If you have received any health benefits from the Veterans Administration or one of their facilities, including prescription drugs, in the last three months, you are not eligible for an HSA.

> My employer offers an HRA. Can I have both an HRA and an HSA?

You can have both types of accounts, but only under certain circumstances. General Health Reimbursement Arrangements (HRAs) will probably make you ineligible for an HSA. If your employer offers a "limited purpose" (limited to dental, vision or preventive care) or "post-deductible" (pay for medical expenses after the plan deductible is met) HRA, then you can still be eligible for an HSA. If your employer contributes to an HRA that can only be used when you retire, you can still be eligible for an HSA.

> If my spouse has an FSA or HRA through their employer, can I have an HSA?

You cannot have an HSA if your spouse's FSA or HRA can pay for any of your medical expenses before your HDHP deductible is met.

> I do not have a job. Can I have an HSA?

Yes, if you have coverage under an HDHP. You do not have to have earned income from employment - in other words, the money can be from your own personal savings, income from dividends, unemployment or welfare benefits, etc.

> Does my income affect whether I can have an HSA?

There are no income limits that affect HSA eligibility. However, if you do not file a federal income tax return, you may not receive all the tax benefits HSAs offer.

> Can I start an HSA for my child?

No, you cannot establish separate accounts for your dependent children, including children who can legally be claimed as a dependent on your tax return.

> I am a single parent with HDHP coverage, but have child/relative that can be claimed as a dependent for tax purposes and this dependent also has non-HDHP coverage. Am I still eligible for an HSA?

Yes, you are still eligible for an HSA. Your dependent's non-HDHP coverage does not affect your eligibility, even if they are covered by your HDHP. You can contribute up to the statutory limit ($6,550 in 2014) to your HSA. (Department of Treasury)

> If both spouses have family HDHP coverage, but one spouse has other coverage, are both spouses eligible for an HSA? How much can each spouse contribute?

The following examples describe how much can be contributed under varying circumstances. Assume that neither spouse qualifies for "catch-up contributions. " Example 1: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has self-only coverage with a $200 deductible. Wife, who has coverage under a low-deductible plan, is not eligible and cannot contribute to an HSA. Husband may contribute $6,550 in 2014 to an HSA. Example 2: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has self-only HDHP coverage with a $2,200 deductible. Both husband and wife are eligible individuals. Husband and wife are treated as having only family coverage. The combined HSA contribution by husband and wife cannot exceed $6,550 in 2014, to be divided between them by agreement. Example 3: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has family HDHP coverage with a $3,000 deductible. Both husband and wife are eligible individuals. The maximum combined HSA contribution by husband and wife is $6,550 in 2014, to be divided between them by agreement. Example 4: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has family coverage with a $200 deductible. Husband and wife are treated as having family coverage with the lowest annual deductible ($200). Neither husband nor wife is an eligible individual and neither may contribute to an HSA. Example 5: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also is enrolled in Medicare. Wife is not an eligible individual and cannot contribute to an HSA. Husband may contribute $6,550 in 2014 to an HSA (Department of Treasury)

> Must couples open separate accounts?

If both husband and wife are eligible to contribute to an HSA, they are both eligible to establish separate HSAs. However, if both spouses want to make “catch-up” contributions when they are age 55+, they must establish separate accounts.

What if I have some other coverage or benefit?
> May an individual covered by an employer assistance program (EAP), disease management program or wellness program establish an HSA?

Yes, you are still eligible for an HSA. Your dependent’s non-HDHP coverage does not affect your eligibility, even if they are covered by your HDHP. You can contribute up to the statutory limit ($5,950) to your HSA. (Department of Treasury)

> Can I get an HSA even if I have other insurance that pays medical bills?

You are only allowed to have auto, dental, vision, disability and long-term care insurance at the same time as an HDHP. You may also have coverage for a specific disease or illness as long as it pays a specific dollar amount when the policy is triggered. Wellness programs offered by your employer are also permitted if they do not pay significant medical benefits.

> May an individual who uses a discount card for health care service or products contribute to an HSA?

A discount cardholder may be eligible to establish an HSA if the individual is covered by a high-deductible health plan and is required to pay health care costs, taking into account the discount, until the HDHP deductible is satisfied.

> I am active-duty military and have Tricare coverage. Can I have an HSA?

No. Active duty or retired service members receiving medical coverage under TRICARE are not eligible individuals and may not contribute to an HSA. Should TRICARE offer an HSA-qualified HDHP, individuals who select it and are otherwise eligible would be able to make contributions to an HSA.

What if I lose my HDHP coverage
> I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for medical expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

> What happens to the money in my HSA if I lose my HDHP coverage?

Funds deposited into your HSA remain in your account and automatically roll over from one year to the next. You may continue to use the HSA funds for qualified medical expenses. You are no longer eligible to contribute to an HSA for months that you are not an eligible individual because you are not covered by an HDHP. If you have coverage by an HDHP for less than a year, the annual maximum contribution is reduced; if you made a contribution to your HSA for the year based on a full year's coverage by the HDHP, you will need to withdraw some of the contribution to avoid the tax on excess HSA contributions. If you regain HDHP coverage at a later date, you can begin making contributions to your HSA again.

5. How Do I Set Up an HSA?

> Will you provide tax advice in connection with my HSA?

Tax advice concerning your HSA will not be provided. It is your sole responsibility to determine the tax consequences of establishing an HSA. Please discuss any questions you may have with your tax advisor or HDHP provider agent.

> How soon can I open my account?

Your account can be established as early as the effective date of your HDHP coverage. However, if your coverage begins on any day other than the first day of the month, you cannot establish your account until the first day of the following month.

> I want to make sure my HSA is established as soon as possible. Can I establish my account before my HDHP coverage begins?

You can complete all the paperwork and make a minimum deposit to your account prior to the effective date of your HDHP coverage. However, your account is not officially "established" until your HDHP coverage begins. But completing the necessary steps before your coverage begins ensures that your HSA will be "established" as early as possible. This is especially important when your HDHP coverage is effective on a non-business day.

6. What Am I Allowed to Use My HSA Money for?

> Does an HSA pay for things that regular insurance pays for?

HSA funds can pay for any “qualified medical expense”, even if the expense is not covered by your HDHP. For example, most health insurance does not cover the cost of over-the-counter medicines, but HSAs can. If the money from the HSA is used for qualified medical expenses, then the money spent is tax-free.

> How do I know what is included as "qualified medical expenses"?

Unfortunately, we cannot provide a definitive list of "qualified medical expenses". A partial list is provided in IRS Pub 502 (available at www.irs.gov). There have been thousands of cases involving the many nuances of what constitutes "medical care" for purposes of section 213(d) of the Internal Revenue Code. A determination of whether an expense is for "medical care" is based on all the relevant facts and circumstances. To be an expense for medical care, the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness. The determination often hangs on the word "primarily."

> Who decides whether the money I'm spending from my HSA is for a "qualified medical expense"?

You are responsible for that decision, and therefore should familiarize yourself with what qualified medical expenses are (as partially defined in IRS Publication 502) and also keep your receipts in case you need to defend your expenditures or decisions during an audit.

> What happens if I don't use the money in the HSA for medical Expenses?

If the money is used for other than qualified medical expenses, the expenditure will be taxed and, for individuals who are not disabled or over age 65, subject to a 10% tax penalty.

> Are dental and vision care qualified medical expenses under an HSA?

Yes, as long as these are deductible under the current rules. For example, cosmetic procedures, like cosmetic dentistry, would not be considered qualified medical expenses.

> Can I use the money in my HSA to pay for medical care for a family member?

Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty. This is one of the great advantages of HSAs.

> Can I use my HSA to pay for Medical services provided in other countries?

Yes.

> Can I pay my health insurance premiums with an HSA?

You can use your HSA to pay health insurance premiums if you are collecting Federal or State unemployment benefits, or you have COBRA continuation coverage through a former employer.

> Can I purchase long-term care insurance with money from my HSA?

Yes, if you have tax-qualified long-term care insurance. However, the amount considered a qualified medical expense depends on your age. See IRS Publication 502 for the amounts deductible by age.

> I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for medical expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

> Do unused funds in an HSA roll over year after year?

Yes, the unused balance in a Health Savings Account automatically rolls over year after year. You won't lose your money if you don't spend it within the year.

> What happens to the money in an HSA after I turn 65?

You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or "Medigap" policy. Once you turn age 65, you can also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 10 percent penalty on the amount withdrawn.

> Can I use my HSA to pay for medical expenses incurred before I set up my account?

No. You cannot reimburse qualified medical expenses incurred before your account is established. We recommend you establish your account as soon as possible.

> How do I use my HSA to pay my physician when I'm at the physician's office?

If you are still covered by your HDHP and have not met your policy deductible, you will be responsible for 100% of the amount agreed to be paid by your insurance policy to the physician. Your physician may ask you to pay for the services provided before you leave the office. If your HSA custodian has provided you with a checkbook or debit card, you can pay your physician directly from the account. If the custodian does not offer these features, you can pay the physician with your own money and reimburse yourself for the expense from the account after your visit. If your physician does not ask for payment at the time of service, the physician will probably submit a claim to your insurance company, and the insurance company will apply any discounts based on their contract with the physician. You should then receive an "Explanation of Benefits" from your insurance plan stating how much the negotiated payment amount is, and that you are responsible for 100% of this negotiated amount. If you have not already made any payment to the physician for the services provided, the physician may then send you a bill for payment.

> What happens to the money in my HSA when I die?

What happens depends on how the HSA is designed. If your spouse is designated as the beneficiary by you, your spouse becomes the owner of the HSA when you die. If you provide that it goes to your estate or other entity, the value of the HSA at death is income to the estate or other entity.

7. How Do I Fund My HSA?

> I am over 55 but under 65. Are there additional advantages for me?

The government has allowed people over the age of 55 to invest more than others into their HSAs through "catch-up" contributions. This means that you are allowed to invest additional money into your HSA for 2013 and 2014 of $1000. If you turn 55 during any of the years above, you can only contribute a pro-rated amount based on the number of full months you are 55. These contributions must stop once you become eligible for Medicare.

> Who may contribute to my HSA?

Contributions to your HSA can be made by an eligible individual, the individual's employer, the individual's family members, and any other person. Contributions made by the individual are deductible from the individual's adjusted gross income. Contributions made by the individual's employer are excluded from the individual's income and are not taxable to the individual. Contributions from all sources are aggregated for purposes of applying the maximum annual contribution limit described below.

> Are rollover contributions to my HSA permitted?

Rollover contributions from MSAs and other HSAs into an HSA are permitted. Rollover contributions to your HSA need not be in cash and are not subject to the annual contribution limits. In taxable years beginning after 2006, a one-time rollover by direct transfer from a traditional IRA or a Roth IRA to an HSA is generally permitted subject to the maximum contribution limits. A qualified distribution from an HRA or an FSA may generally be rolled over, by direct transfer, to an HSA.

> How much can I contribute to my HSA each year?

In general, the maximum annual contribution to an HSA is the sum of the limits determined separately for each month, based on status, eligibility, and health plan coverage as of the first day of the month. Although the maximum annual contribution limit is determined on a monthly basis, there is no actual monthly limit on the amount that may be contributed. If an individual was under age 55 at the end of the year, and was an eligible individual on the first day of every month during the year with the same self-only HDHP coverage, the HSA annual maximum contribution limit is : $3,250 for individuals and $6,450 for family coverage in 2013. In 2014, those limits are $3,300 and $6,550.

> I have a very high deductible. Is there a limit on how much I can contribute?

The most you can put into your account for 2013 is $3,250 if you have single coverage and $6,450 for a family.  In 2014, those limits are $3,300 and $6,550. These amounts will be increased for inflation in future years.

> Do my HSA contributions have to be made in equal amounts each month?

No, you can contribute in a lump sum or in any amounts or frequency you wish. However, your account trustee/custodian (bank, credit union, insurer, etc.) can impose minimum deposit and balance requirements.

> Does my contribution depend on when I establish my HSA account or when my HDHP coverage begins?

An exception is provided for an individual who becomes HSA-eligible after the beginning of a taxable year who does not establish and HDHP as of the beginning of such year, generally January 1. In general, for tax years beginning after 2006, an individual who becomes covered under an HDHP in a, month other than January may be permitted to make the full HSA contribution for the year. An individual who is an eligible individual during the last month of a taxable year is treated as having been an eligible individual during every month during the taxable year for purposes of computing the amount that may be contributed to the HSA for the year. As a result, such individual is allowed to make contributions, including catch-up contributions for months before the individual was enrolled in an HDHP. If an individual makes contributions under the exception and does not remain an eligible individual during the testing period, the amount of the contributions attributable to months preceding the month in which the individual was an eligible individual, which could not have been made but for the provision, is includible in gross income. A 10 percent additional tax also applies to the amount includible. An exception applies if the employee ceases to be an eligible individual by reason of death or disability. The testing period is the period beginning with the last month of the taxable year and ending on the last day of the 12th month following such month. The amount is includible for the taxable year of the first day during the testing period that the individual is not an eligible individual.

> Can my employer contribute to my HSA?

Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. If your employer contributes some of the money, you can make up the difference.

> Do my contributions provide any tax benefits?

Your personal contributions offer you an "above-the-line" deduction. An "above-the-line" deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.

> If my employer contributes to my HSA, does that also provide me any tax benefit?

If your employer makes a contribution to your HSA, the contribution is not taxable to you the employee (excluded from income).

> Can I make contributions through my employer on a "pre-tax" basis?

If your employer offers a "salary reduction" plan (also known as a "Section 125 plan" or "cafeteria plan"), you (the employee) can make contributions to your HSA on a pre-tax basis (i.e., before income taxes and FICA taxes). If you can do so, you cannot also take the "above-the-line" deduction on your personal income taxes.

> I turned 55 this year. Can I make the full "catch-up" contribution?

If you had HDHP coverage for the full year, you can make the full catch-up contribution regardless of when your 55th birthday falls during the year. If you did not have HDHP coverage for the full year, you must pro-rate your "catch-up" contribution for the number of full months you were "eligible", i.e., had HDHP coverage. However, if you are covered on December 1, you are treated as an eligible individual for the entire year and get the full contribution. (Department of Treasury)

> If both spouses are 55 and older, can both spouses make "catch-up" contributions?

Yes, if both spouses are eligible individuals and both spouses have established an HSA in their name. If only one spouse has an HSA in their name, only that spouse can make a "catch-up" contribution.

> If each spouse has self-only HDHP coverage (neither has family coverage), how much can we contribute?

For 2013 and forward, each spouse is eligible to contribute to an HSA in their own name, up to the statutory limit ($3,250 for 2013, $3,300 for 2014). *The catch up contributions are in addition to these limits. (Department of Treasury)

> Does tax filing status (joint vs. separate) affect my contributions?

Tax filing status does not affect your contribution.

> May a self-employed person contribute to an HSA on a pre-tax basis?

No. Self-employed persons may not contribute to an HSA on a pre-tax basis and may not take the amount of their HSA contribution as a deduction for SECA purposes. However, they may contribute to an HSA with after-tax dollars and take the above-the-line deduction.

> Do unused funds in a health savings account roll over year after year?

Yes, the unused balance in a Health Savings Account automatically rolls over year after year. You won't lose your money if you don't spend it within the year.

> Can couples establish a "joint" account and both make contributions to the account, including "catch-up" contributions?

"Joint" HSA accounts are not permitted. Each spouse should consider establishing an account in their own name. This allows you to both make catch-up contributions when each spouse is 55 or older.

> Must couples open separate accounts?

If both husband and wife are eligible to contribute to an HSA, they are both eligible to establish separate HSAs. However, if both spouses want to make "catch-up" contributions when they are age 55+, they must establish separate accounts.

> Can the funds in an HSA be invested?

Yes, you can invest the funds in your HSA. The same types of investments permitted for IRAs are allowed for HSAs, including stocks, bonds, mutual funds, and certificates of deposit.

8. What are the Rollover Rules?

> Are rollover contributions to my HSA permitted?

Rollover contributions from MSAs and other HSAs into an HSA are permitted. Rollover contributions to your HSA need not be in cash and are not subject to the annual contribution limits. In taxable years beginning after 2006, a one-time rollover by direct transfer from a traditional IRA or a Roth IRA to an HSA is generally permitted subject to the maximum contribution limits. A qualified distribution from an HRA or an FSA may generally be rolled over, by direct transfer, to an HSA.

> Can I roll the money in an HSA over into an IRA?

You cannot roll the HSA funds over into an IRA. They will stay in the HSA or be rolled into another HSA.

> Can I roll over and IRA, 401(K) or other retirement plan into an HSA?

In taxable years beginning after 2006, a one-time rollover by direct transfer from a traditional IRA or a Roth IRA to an HSA is generally permitted subject to the maximum contribution limits. After December 20, 2006, a qualified distribution from an HRA or an FSA may generally be rolled over, by direct transfer, to an HSA. You cannot directly roll funds in an IRA, 401(k) or other retirement plan into an HSA. You can withdraw funds from one of these accounts, pay applicable taxes (and penalties) on the amount you withdraw, and then use the remaining funds to make a contribution to your HSA. However, the amount you contribute to your HSA is still limited by the annual contribution limits.

9. Can I Borrow Against My HSA?

> Can I pledge any part of my HSA as security for a loan?

Any portion of your HSA that you pledge as security for a loan will be treated as a distribution for the year the pledge is made. The amount pledged is includable in your gross income and a 10 percent premature distribution penalty tax on the pledged amount may also be imposed.

> Can I borrow against the money my HSA?

No. You may not borrow against it or pledge the funds in it as security for a loan. For more information on prohibited transactions, see Section 4975 of the Internal Revenue Code.