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First United Bank What is a Health Savings Account?
  Health Savings Accounts (HSAs) are tax-favored savings arrangements for individuals and families covered by high deductible health insurance plans. HSAs allow for tax-deductible contributions and tax-free distributions if distributed amounts are used to pay for qualified medical expenses.
First United Bank Who is eligible to establish an HSA?
  Any eligible individual may establish an HSA. Eligibility is determined on a monthly basis. To be eligible, an individual must meet all of the following requirements:
 
  • Health Savings Account CardCovered under a High Deductible Health Plan (HDHP) on the first day of the month.
  • Covered under a High Deductible Health Plan (HDHP) that falls within the HSA Contribution Limits.
  • Generally not covered by any health plan that is not an HDHP (exceptions exist for coverage that is not part of an HDHP for accidents, disability, dental care, vision care, long-term care, or permitted insurance*).
  • Not enrolled in Medicare.
  • Not able to be claimed as a dependent on another person's tax return.
 

NOTE: * Permitted insurance is insurance under which substantially all of the coverage provided relates to liabilities incurred under workers' compensation laws, tort liabilities, liabilities relating to ownership or use of property (e.g., automobile insurance), insurance for a specified disease or illness and insurance that provides a fixed payment for hospitalization.
First United Bank How does an HSA work?
  An HSA allows you to deposit money into a deposit account at a financial institution and deduct the contribution on your tax return. An HSA does not have a deadline and you can roll over the funds each year and use them as needed.
  Employer HSA Benefits: By offering HSAs through their cafeteria plans and/or providing employer HSA contributions, employers potentially have much to gain.
 
  • Contributions are considered employer-provided coverage for medical expenses.
  • Increased ability to attract and retain employees.
  • Lower overall health insurance costs.
  Employee HSA Benefits: Employees might benefit from participating in an HSA program in the following ways:
 
  • Ability to carry over contributions year to year.
  • Portability of assets.
  • Payment for medical costs just as you would from any account with tax deductible contributions.
  • Potential for additional employee benefits.
  • Free Visa Debit Card for convenient payment processing.
PLEASE CONSULT YOUR TAX PROFESSIONAL FOR
TAX RULES AND REQUIREMENTS REGARDING HSAs.
Bank Smart. Live Well. Enjoy the Ride.
 

HSA CONTRIBUTION LIMITS

  2011 2012 Change
Individual Coverage $3,050 $3,100 +$50
Family Coverage $6,150 $6,250 +$100

HDHP QUALIFICATION
The IRS also defines what qualifies as an HDHP. For 2012, an HDHP with individual coverage must have at least $1,200 in annual deductible and no more than $6,050 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,400 in annual deductible and $12,100 in annual out-of-pocket expenses.

  2011 2012 Change
INDIVIDUAL COVERAGE      
  Minimum Deductible $1,200 $1,200 None
  Maximum Out-of-Pocket $5,950 $6,050 +$100
FAMILY COVERAGE      
  Minimum Deductible $2,400 $2,400 None
  Maximum Out-of-Pocket $11,900 $12,100 +$200

Qualified medical expenses include expenses incurred by spouses and dependents, doctor visits, vision expenses, prescriptions and dental expenses, even if they are not eligible for an HSA. Although employers may contribute to an employee's HSA; each HSA is owned and controlled by the individual, not the employer.