2010 HSA Guidelines

The Treasury Department and IRS recently issued new guidelines on the maximum and catch-up
contribution levels for Health Savings Accounts (HSAs) and the minimum deductible and maximum out-of-pocket amounts for high-deductible health plans (HDHPs).

Feature
Individual minimum deductible - $ 1,200
Individual maximum out of pocket - $ 5,950
Individual maximum contribution - $ 3,050
Family minimum deductible - $ 2,400
Family maximum out of pocket - $11,900
Family maximum contribution - $ 6,150
Catch-up contribution (ages 55 and over) - $ 1,000

Other info regarding contributions:

• Maximum contributions can be reached regardless of deductible size (anything within acceptable ranges)
• You are eligible for the maximum contribution in your first year, so long as your policy is effective by Dec. 1
• You can make a one-time contribution from an IRA, HRA, or FSA account
• Catch-up contributions: Individuals age 55+ are entitled to make additional "catch-up" contributions up to $1,000 this year
• An employer may contribute to an employee's HSA account (pre-tax basis to employee, tax-deductible to employer)

Tax Treatment of Withdrawals--Overview:

Withdrawals are tax-free and penalty free if used to pay for:

• Qualified medical expenses (click link on right hand side to see complete list)
• COBRA premiums
• MEDICARE premiums (an excellent way to "disburse" your tax-free earnings)
• Health insurance premiums while receiving unemployment compensation
• Premiums for qualified long term care insurance

Withdrawals are subject to ordinary income tax and a 15% premature withdrawal penalty if:

• Made before age 65, AND
• Used to pay non-qualifying medical expenses

Withdrawals are not subject to a premature withdrawal penalty if made:

• After turning 65, or
• Due to death or disability (any age)

What Benefits can my customers have with an HSA?

-With a Health Savings Account you have the power to decide where you spend your health care dollars.

-Broader range of health care service. Access funds to pay health expenses not typically paid by health plans, on a tax-free basis.

-Tax advantages. Contributions are tax deductible, qualified withdrawals are tax-free, and earnings are tax deferred.

-Retirement income supplement. At age 65, accumulated funds including interest can be withdrawn for non-qualified expenses without tax penalties.