Health Savings Accounts
A Tax Advantage to Offset health Care Expenses

Health Savings Accounts, or HSAs, were created by Congress to combat rising medical costs by providing an incentive for more consumers to pay “first-dollar” medical expenses.

What are an HSA’s benefits?

HSAs can profide significant tax benefits to eligible individuals

Tax Benefits

• HSA contributions are excluded from income
• HSA earnings are tax deferred
• If used for qualified medical expenses, HSA assets are never taxed
• Unused HSA assets may be used for retirement
• Upon death, HSA assets become the property of a named death beneficiary

What are qualified medical expenses?

These expenses include:

• actual medical expenses
• long-term care insurance
• healthcare coverage when unemployed
• certain continuation-of-benefit healthcare coverage
• certain health insurance after age 65

Who is eligible to participate?

You are an eligible individual for any month if you

• are covered under an HDHP* on the first day of such month;
• are not also covered by any other health plan that is not an HDHP*(with limited exceptions);
• are not enrolled for benefits under Medicare;
• are not able to be claimed as a dependent on another person’s tax return.

What is considered an HDHP*?

An HDHP* is an insurance policy that meets certain dollar limits as shown in the table below.

2007 HDHP* Limits* Self Only Family Annual Deductible $1,100 or more $2,200 or more Annual Deductible Plus out-of-pocket expenses cannot exceed... $5,500 $11,000

Can self-employed individuals have an HSA?

Sole proprietors and others who are self-employed can have an HSA, and are, in fact, often ideal candidates for an HSA.

What are the HSA contribution rules?

The total amount you or your employer may contribute to an HSA for any taxable year is dependent upon whether you have individual or family coverage under a high deductible health plan as shown in the table below.

2007 HSA Contribution Limits* Self Only Family Annual Contribution Limit    $2,850 $5,650

Catch up contributions for an individual who is 55 or older increased
by statute to $800 for 2007.

*HDHP* and contribution limitations are revised each year
to reflect cost-of-living increases.

*HDHP refers to a High Deductible Health Plan

For more information...

To learn more about how to take advantage of the many HSA benefits, ask one of our representatives for more details. Contact us.