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| Health Savings Account (HSA) |
| An HSA is a Health Savings Account that allows you to save money in a tax-free* account. Because these accounts have certain tax advantages you must meet the following IRS requirements to be eligible and qualify for an HSA: |
- Participate in a qualified high deductible health plan (HDHP), such as Consumer Choice
- Have no other medical coverage (unless it is also a qualified HDHP)
- Are not enrolled in Medicare
- You are not claimed as a dependent on someone else’s tax return
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| An HSA is a health care savings account that provides a three-way tax advantage |
- You can contribute to the account on a tax free basis – and receive monthly employer premium rebate credits. You decide when to spend or save your deposits.
- Your account earns interest income right away - tax free! When you have a minimum account balance of $1,000, you can choose to invest in a wide selection of mutual funds offered through Bank of America’s program;
- When you withdraw your funds to pay for eligible health care expenses, they are typically tax free.
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| The money in your HSA can be used on a tax-free basis to pay for: |
- Your medical plan deductibles
- Eligible health care expenses not covered by insurance (IRS Publication 502)
- Health expenses during retirement
- You can use your money for any purpose (subject to income and penalty tax if it’s not an eligible expense)
- After reaching age 65, you can use HSA savings for any purpose (subject to normal income tax)
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| The annual maximum HSA contribution allowed for 2009 is $3,000 for individual (Employee only) and $5,950 for Family Coverage (all other coverage tiers). If you are 55 or older in 2009 you can contribute an additional $1,000 “catch-up” contribution. |
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| Maximum contribution amounts include medical premium rebates but not HSA rollover funds from previous years. Unused funds are not forfeited; money not used in the account will roll forward from year to year. |
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| The IRS requires you file a Form 8889 with your federal tax return if you made contributions or took withdrawals from an HSA during the tax year. |
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- Flexibility
Unused money rolls over from year to year
- Portability
Money in your account goes with you if you retire or leave the company
- Value
Account is tax-free* and contributions up to the federal limit can be made each year. In addition, HSA money can be invested.
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