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Overview
Learn How HSAs Work and How to Maximize Their Benefits
Opening and Maximizing an HSA Investment Account
Preserving the Account Balance By Controlling Costs
Links to IRS
Bulletins
Links
to IRS Forms, Instructions & Publications
Department of Treasury HSA
Information Resource Page
Links
to Department of Labor Bulletins
Links to Legal Reviews
Contact us for
more information
Overview
Health Savings Accounts (HSAs) are the cornerstone of Consumer Directed
Health Care.
Section 223 of the US tax code (TITLE
26,
Subtitle A,
CHAPTER 1,
Subchapter B,
PART VII,
Sec. 223.) describes
the tax treatment of Health Savings Accounts.
An HSA is both an investment and a source of
tax-free money that can be used to pay for one's day-to-day health care (often called
1st dollar medical expenses).
At retirement, just like an IRA, these funds can be used for any purpose.
While much is known regarding the risks of various financial instruments,
Health Savings Accounts are unique in that they also include another risk, that of assuming
financial responsibility for one's
day-to-day health care.
Quantitating the relative risks and understanding proven strategies that
mitigate those risks are essential to maximizing the very substantial benefits Health Savings Accounts
can offer.
Below are a few resources to help novices become more familiar with the
various risks, benefits, regulatory requirements and important investing
strategies associated with
Health Savings Accounts. If you would like more information, please
contact
us below.
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Learn How HSAs Work and How to Maximize Their
Benefits
See an
HSA Slide Presentation.
Download a
Department of Treasury one-page tri-fold brochure that
provides a simple overview of HSA basics for
2007 and
2008.
See a sample
HSA
Investment Scenario (not to be construed as
either financial advice or an accurate estimate of any one individual's real-life
experience) where you can estimate future HSA balances and after cost
returns, by changing the interest rate, the estimated annual health care
expenses and/or vary the annual contribution.
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Opening and Maximizing an HSA Investment Account
Once you have a qualifying
high deductible health plan, to open an HSA you need to apply with a
Federally approved trustee. Banks and insurance
companies predominate in the trustee marketplace. Go to our
HSA Trustees Page to find a few links to various
trustees and even get application documents online.
Like most savings/investment
vehicles, HSAs require a diligent contribution commitment and ongoing
attention to maximizing return on investment, especially with regard to retirement
needs.
As HSAs become more common and
the average balances rolling over from year to year grow larger, we
anticipate that numerous investment houses and brokerage firms will
begin to enter the trustee marketplace, offering significantly higher rates of return
than currently available.
To learn how Investing
strategies education can produce big difference in
long term yield try our
HSA
Investment Scenario spreadsheet (not to be construed as
either financial advice or an accurate estimate of any one individuals real-life
experience).
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Preserving the Account Balance
By Controlling Costs
While reimbursing medical
expenses from an HSA is a great way to pay for health care on a pre-tax basis,
the more one withdraws from the account the less the tax-free investment income
generated for use for future healthcare needs or retirement.
Careful shopping for more
affordable services reduces the need to withdraw money from your tax-free
investment account. Go to our
Consumer Page to learn tricks and
techniques for saving on health care or review the following document (Controlling
Costs By Accessing More Affordable Care) can help you understand how medical charges
are calculated and identify strategies that will save you money on medical
services as well as locate the most appropriate medical services much more
efficiently.
Your insurance company (likely a
PPO type insurance plan) usually has
fee information that you can request with respect to their network physicians
and hospitals etc.
The key to success with an HSA is to contribute maximally and reduce
health care expenditures in order to protect the balance on the account so
that it can grow more quickly.
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IRS Bulletins
2004-2, Notice 2004-2: General guidance on Health Savings Accounts.
2004-15, Notice
2004-23: Preventive Care.
2004-15: Notice 2004-25:
Transition
Relief for HSAs Established for Calendar Year 2004.
2004-15, Rev. Rul. 2004-38: Prescription Drug Coverage
below Minimum Deductible.
2004-15, Rev. Proc. 2004-22: Transition Relief for
Prescription Drug Rider Below Deductible.
2004-22, Rev. Rul.
2004-45: Health Savings Account (HSA) - interaction with
other health arrangements.
2004-22, Rev. Rul. 2004-43: Health Savings Account (HSA) -
transition relief for individuals in states where high deductible health
plans (HDHPs) as described in section 223(c)(2) are not available because
state laws require health plans to provide certain benefits without regard
to a deductible or below the minimum annual deductible.
Notice 2004-50: Q & A regarding Health Savings Accounts (HSAs).
Revised Notice 2004-2 (July 26, 2004): General guidance
with Q & A (Notice
2004-50) regarding Health Savings Accounts (HSAs)
Revised Procedure 2004-71 (December 13, 2004):
Indexed 2005 HSA & MSA limits
Notice 2005-8 (January 11, 2005):
Health Savings Accounts — Partnership Contributions to a Partner’s Health
Savings Account (HSA); S Corporation’s Contributions to a 2-Percent
Shareholder-Employee’s HSA
Indexed Amounts for Health Savings Accounts for
2006:
Department of Treasury/ Internal Revenue Services, October 28, 2005
Notice 2005-83 Provides relief for certain
non-calendar-year plans with nonconforming state-mandated benefits:
Department of Treasury/ Internal Revenue Services, November 17,
2005
Final Regulations Regarding Employer Comparable
Contributions to Health Savings Accounts under Section 4980G:
Department of Treasury/ Internal Revenue Services, July 28, 2006
Technical Explanation of H.R. 6408, The “Tax Relief
And Health Care Act Of 2006,” As Introduced In The House On December 7, 2006,
Joint Committee On Taxation, December 7, 2006
Final Rules on Comparable Employer Contribution
-Accelerated and When Employee Has Not Opened an HSA by Year end,
Federal Register / Vol. 73, No. 75 / Thursday, April 17, 2008
Notice 2008-51 - IRA to HSA Transfers,
Department of Treasury
Notice 2008-52 - Full Contribution Rule,
Department of Treasury
Notice 2008-59 - New Guidance on Health Savings
Accounts - HSA "Grab Bag" Guidance - Q & A on HSAs in many different
situations,
Department of Treasury, June 25, 2008
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IRS Forms, Instructions & Publications:
Publications:
See
IRS Publication 969 (2004 PDF): Health Savings
Accounts and Other Tax Favored Health Plans to see the IRS
guidance on Health Saving Accounts for 2004.
See
IRS Publication 969 (2004 HTML): Health Savings
Accounts and Other Tax Favored Health Plans to see the IRS
guidance on Health Saving Accounts for 2004.
See
IRS Publication 502 (2004), Medical and Dental Expense to see what expenses the IRS will allow as
"qualified medical expenses" (PDF).
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Forms & Instructions:
See
IRS Form 8853, Archer MSAs and Long-Term Care
Insurance Contracts to review the form used by
individuals for reporting on MSA and Long Term Care insurance contracts (PDF).
See
IRS Instructions for Form 8853, Archer MSAs and
Long-Term Care Insurance Contracts to review
instructions for filling out Form 8853 (PDF).
See
IRS Form 8889, Health Savings Accounts to
review the form used by individuals for reporting information on an HSA (PDF).
See
IRS Instructions for Form 8889, Health Savings
Accounts to review instructions for filling out Form
8889 (PDF).
See
IRS Form 5498sa (2006), HSA, Archer MSA, or Medicare +
Choice MSA Information to review the form used by
trustees to report HSA, Archer MSA, or Medicare + Choice MSA Information (PDF).
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Department of Labor Bulletins
See April 7, 2004
DOL Field Assistance Bulletin 2004-1 to see the
Department of Labor
guidance on ERISA and Health Saving Accounts (HTML).
See December 22, 2004
DOL Advisory Opinion 2004-09a to
see the Department of Labor guidance concerning the application of the
prohibited transaction provisions regarding Health Saving Accounts (HTML).
See October 27, 2006-
DOL Advisory Opinion 2006-2 for additional Department of Labor guidance the application of the Employee
Retirement Income Security Act of 1974 (ERISA) to HSAs (Q & A , HTML).
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Department of Treasury
See
Home Page for Department of Treasury HSA Information
(Comprehensive Reference) for a comprehensive source
of reference documents regarding Health Savings Accounts.
See
Department of Treasury Publication: "All About HSAs" to
view a Department of Treasury summary outline document on Health Savings
Accounts. This document was reformatted into an outline format for
your convenience
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Legal Briefs
(Online)
See the January 2004 Kilpatrick Stockton LLP - Employee Benefits Legal Alert;
"Health
Savings Accounts: Medicare Reform Reshapes the Landscape for Active Employee
Health Coverage" (PDF).
See the March 2004 Kilpatrick Stockton LLP - Employee Benefits Legal Alert;
"HSAs
and the HIPAA Privacy Rules: The Clash of the Acronyms" (PDF).
See the April 2004 Kilpatrick Stockton LLP - Employee Benefits Legal Alert;
"Health
Savings Account Fever: A Blistering Pace for HSA Guidance for Active Employee
Health Coverage" (PDF).
See the May 2004 Kilpatrick Stockton LLP - Employee Benefits Legal Alert;
"DOL
Paves the Way for Employer-Arranged Health Savings Accounts" (PDF).
See the May 2004 Kilpatrick Stockton LLP - Employee Benefits Legal Alert;
"IRS
Health Savings Account Guidance III: Coordinating HSAs with Other Health
Accounts" (PDF).
See the July 2004 Kilpatrick Stockton LLP - Employee Benefits Legal Alert;
"A
Summer Tsunami of HSA Guidance (But Will Employers Be Interested?)" (PDF).
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