Regence bluecross blueshield, Health savings accounts, hsa's

• New HSA Application
• HSA Brochure
• Rollover Form
• IRA to HSA Rollover Form

A one-time tax free trustee-to-trustee transfer of IRA funds to an HSA is permitted.  The amount transferred may not exceed your maximum allowable annual HSA contribution (see below).  Any money transferred from your IRA counts toward your maximum HSA contribution for that tax year.  You may not transfer a "Catch-Up" contribution. You must maintain your High Deductible Health Plan for the month in which you make the transfer and the 12 following months or you will be subject to taxes and a penalty.  There is no tax advantage for IRA to HSA transfer and you may not take a deduction for any funds transferred from your IRA and contributed to your HSA.

If you can't open the files download Acrobat Reader

1. Contributions are no longer limited to the lesser of the deductible or the Treasury Cap.  Now everyone can contribute the Treasury Cap Limit.  This applies to both new and existing accounts.
2. 2007 Treasury Cap:  $2850 individuals/$5650 family and $2900 indivduals/$5800 family.  (indexed annually)
3. Catch-up contribution: If you are turning 55 anytime in 2007 or older is $800 for 2007 and $900 for 2008.
4. NO MORE PRO-RATING OF CONTRIBUTIONS!  From now on, no matter when you get the qualified insurance during the year, you are eligible to contribute the full Treasury Cap amount listed above.
5. NO MORE PRO-RATING OF CATCH-UP CONTRIBUTIONS.  Same rules as above.

HSA Tip: With these new HSA contribution limits for 2007 and beyond, we highly recommend you fully fund your HSA. If you are currently funding an IRA or 401K  you should consider funding your HSA first, as you can always get access to these funds for you and your dependants for qualified health care expenses, while still receiving the tax benefits.

Maximum Contributions
For 2007, the maximum you may contribute to a Health Savings Account (HSA) is $2,850 ($2,900 for 2008) for single coverage or $5,650 ($5,800 for 2008) for family coverage.  Minimum HDHP deductibles are $1,100 for individuals and $2,200 for families. (See Catch-Up if age 55 or over)

Minimum Contributions
After you establish your HSA, you have no legal obligation, per HSA regulations, to make additional contributions, even if you continue coverage under a High-Deductible Health Plan (HDHP). 

Catch-Up Contributions
Because a new savings program tends to favor younger people with more time to save, a "catch up" provision was included with HSA regulations.  HSA holders age 55 and older may make additional annual contributions of $800 for 2007 ($900 for 2008), increasing by $100 each year to a maximum additional calendar year contribution of $1,000 in 2009.

Employer Contributions
An employer may contribute to an employee's Health Savings Account (HSA), but the employer must make available comparable contributions on behalf of all "comparable participating employees."  Contributions are considered comparable if they are the same amount or same percentage of the High-Deductible Health Plan (HDHP) deductible.

Partial Year Contributions
Full HSA contribution regardless of month individual becomes eligible. Individuals who become covered under an HSA-eligible plan in a month other than January are allowed to make the maximum HSA contribution for the year.  If an individual does not stay in the HSA-eligible plan 12 months following the last month of the year of the first year of eligibility, the amount which could not have been contributed except for this provision will be included in income and subject to a 10 percent additional tax.

Contribution Deadlines
HSA contributions must be made for a specific year on or before the due date (without extensions) for filing tax returns for that year. So, for 2007, contributions must be made on or before April 15, 2008.

Higher HDHP Deductibles
You may purchase a High-Deductible Health Plan (HDHP) with a deductible beyond the HSA contribution limit.  For example, a single person can purchase a $5,000 deductible HDHP.  However, that person's maximum 2007 HSA contribution would be limited to the $2,850 cap for single coverage. A family can purchase a $10,000 deductible HDHP with a maximum 2007 HSA contribution would be limited to the $5,650 cap.

HSA Contributions must be Cash
Health Savings Account (HSA) contributions must be in cash.  For example, contributions can not be made in stock or other property.

Rollovers are Permitted
Rollover contributions from Archer MSAs and other HSAs are permitted.  Rollovers are not subject to the annual contribution limits and rollover contributions need not be in cash. 

One-time transfer from IRAs to HSAs.
A one-time contribution to an HSA of amounts distributed from an Individual Retirement Arrangement (IRA). The contribution must be made in a direct trustee-to-trustee transfer. The IRA transfer will not be included in income or subject to the early withdrawal additional tax. The transfer is limited to the maximum HSA contribution for the year, and the amount contributed is not allowed as a deduction. Generally, only one transfer may be made during the lifetime of an individual. If an individual electing the one-time transfer does not remain an eligible individual for the 12 months following the month of the contribution, the transferred amount is included in income and subject to a 10 percent additional tax.

Excess HSA Contributions
Contributions by an individual are not deductible to the extent they exceed the maximum limits.  Excess contributions by an employer generate taxable income to the employee.  In addition, a 6% excise tax is imposed on the excess funds.

The excise tax and any net income attributable to excess contributions are avoided if the excess contributions are paid to the HSA owner prior to federal income tax deadline for the year at issue.

Investment earnings accrue tax-free.
HSA distributions are tax-free if they are used to pay for qualified medical expenses.  Qualified expenses include prescription drugs, qualified long-term care services and long-term care insurance, COBRA coverage, Medicare expenses (but not Medigap), and retiree health expenses for individuals age 65 and older. 

Distributions made for any other purpose are subject to income tax and a 10% penalty.  The 10% penalty is waived in the case of death or disability.  The 10% penalty is also waived for distributions made by individuals age 65 and older.

For 2007, the maximum you may contribute to a Health Savings Account (HSA) is $2,850 for single coverage ($2,900 for 2008) or $5,650 for family coverage ($5,800 for 2008) .  Minimum HDHP deductibles are $1,100 for individuals and $2,200 for families. HSA holders age 55 and older may make additional annual contributions of $800 for 2007, increasing by $100 each year to a maximum additional calendar year contribution of $1000 in 2009.

I have a very high deductible, is there a limit on how much I can contribute?

For 2007, the maximum you may contribute to a Health Savings Account (HSA) is $2,850 for single coverage ($2,900 for 2008) or $5,650 for family coverage ($5,800 for 2008).  Maximum HDHP deductibles are $5,000 for individuals and $10,000 for families.

Do my HSA contributions have to be made in equal amounts each month?
No, you can contribute in a lump sum or in any amounts or frequency you wish. However, your account trustee/custodian (bank, credit union, insurer, etc.) can impose minimum deposit and balance requirements.

Does my contribution depend on when I establish my HSA account or when my HDHP coverage begins?
Full HSA contribution regardless of month individual becomes eligible. Individuals who become covered under an HSA-eligible plan in a month other than January are allowed to make the maximum HSA contribution for the year.  If an individual does not stay in the HSA-eligible plan 12 months following the last month of the year of the first year of eligibility, the amount which could not have been contributed except for this provision will be included in income and subject to a 10 percent additional tax. The amount you can contribute is not determined by the date you establish your account. However, medical expenses incurred before the date your HSA is established cannot be reimbursed from the account.

Can my employer contribute to my HSA?
Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. If your employer contributes some of the money, you can make up the difference..

Do my contributions provide any tax benefits?
Your personal contributions offer you an 'above-the-line' deduction. An "above-the-line" deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.

If my employer contributes to my HSA, does that also provide me any tax benefit?
If your employer makes a contribution to your HSA, the contribution is not taxable to you the employee (excluded from income).

Can I make contributions through my employer on a 'pre-tax' basis?
If your employer offers a 'salary reduction' plan (also known as a 'Section 125 plan' or 'cafeteria plan'), you (the employee) can make contributions to your HSA on a pre-tax basis (i.e., before income taxes and FICA taxes). If you can do so, you cannot also take the 'above-the-line' deduction on your personal income taxes.

Can I claim both the 'above-the-line' deduction for an HSA and the itemized deduction for medical expenses?
You may be able to claim the medical expense deduction even if you contribute to an HSA. However, you cannot include any contribution to the HSA or any distribution from the HSA, including distributions taken for non-medical expenses, in the calculation for claiming the itemized deduction for medical expenses.

Can I take a tax deduction for my HDHP premium?
Not at this time.

I'm over 55 and would like to make catch-up contributions to my HSA, like I've done with my IRA. Is that possible?
Yes, individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year until they enroll in Medicare. The additional 'catch-up' contributions to HSA allowed are as follows:

2007 - $800
2008 - $900
2009 and after - $1,000

I turned 55 this year. Can I make the full 'catch-up' contribution?
Yes

If both spouses are 55 and older, can both spouses make 'catch-up' contributions?
Yes, if both spouses are eligible individuals and both spouses have established an HSA in their name. If only one spouse has an HSA in their name, only that spouse can make a 'catch-up' contribution.

If each spouse has self-only HDHP coverage (neither spouse has family coverage), how much can we contribute?
Each spouse is eligible to contribute to an HSA in their own name, up to the amount of the deductibles under their respective policies. However, each spouse's contribution cannot exceed the contribution limit of $2,850 for individuals for 2007. (The catch up contributions are in addition to these limits.)

Does tax filing status (joint vs. separate) affect my contribution?
Tax filing status does not affect your contribution.

I'm a single parent with HDHP coverage but have child/relative that can be claimed as a dependent for tax purposes, and this dependent also has non-HDHP coverage. Am I still eligible for an HSA?
Yes, you are still eligible for an HSA. Your dependent's non-HDHP coverage does not affect your eligibility, even if they are covered by your HDHP.

May a self-employed person contribute to an HSA on a pre-tax basis?
No. Self-employed persons may not contribute to an HSA on a pre-tax basis and may not take the amount of their HSA contribution as a deduction for SECA purposes. However, they may contribute to an HSA with after-tax dollars and take the above-the-line deduction.

Does an HSA pay for the same things that regular insurance pays for?
HSA funds can pay for any 'qualified medical expense', even if the expense is not covered by your HDHP. For example, most health insurance does not cover the cost of over-the-counter medicines, but HSAs can. If the money from the HSA is used for qualified medical expenses, then the money spent is tax-free.

How do I know what is included as 'qualified medical expenses'?
Unfortunately, we cannot provide a definitive list of 'qualified medical expenses'. A partial list is provided in IRS Pub 502 (available at www.irs.gov). There have been thousands of cases involving the many nuances of what constitutes "medical care" for purposes of section 213(d) of the Internal Revenue Code. A determination of whether an expense is for "medical care" is based on all the relevant facts and circumstances. To be an expense for medical care, the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness. The determination often hangs on the word "primarily."

Who decides whether the money I'm spending from my HSA is for a 'qualified medical expense?'
You are responsible for that decision, and therefore should familiarize yourself with what qualified medical expenses are (as partially defined in IRS Publication 502) and also keep your receipts in case you need to defend your expenditures or decisions during an audit.

What happens if I don't use the money in the HSA for medical expenses?
If the money is used for other than qualified medical expenses, the expenditure will be taxed and, for individuals who are not disabled or over age 65, subject to a 10% tax penalty.

Are dental and vision care qualified medical expenses under a Health Savings Account?
Yes, as long as these are deductible under the current rules. For example, cosmetic procedures, like cosmetic dentistry, would not be considered qualified medical expenses.

Can I use the money in my HSA to pay for medical care for a family member?
Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty. This is one of the great advantages of HSAs.

Can I use my HSA to pay for medical serviced provided in other countries?
Yes.

Can I pay my health insurance premiums with an HSA?
You can only use your HSA to pay health insurance premiums if you are collecting Federal or State unemployment benefits, or you have COBRA continuation coverage through a former employer.

Can I purchase long-term care insurance with money from my HSA?
Yes, if you have tax-qualified long-term care insurance. However, the amount considered a qualified medical expense depends on your age. See IRS Publication 502 for the amounts deductable by age.

I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for medical expenses tax-free?
Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

What happens to the money in my HSA if I lose my HDHP coverage?
Funds deposited into your HSA remain in your account and automatically roll over from one year to the next. You may continue to use the HSA funds for qualified medical expenses. You are no longer eligible to contribute to an HSA for months that you are not an eligible individual because you are not covered by an HDHP. If you have coverage by an HDHP for less than a year, the annual maximum contribution is reduced; if you made a contribution to your HSA for the year based on a full year's coverage by the HDHP, you will need to withdraw some of the contribution to avoid the tax on excess HSA contributions. If you regain HDHP coverage at a later date, you can begin making contributions to your HSA again.

Do unused funds in a Health Savings Account roll over year after year?
Yes, the unused balance in a Health Savings Account automatically rolls over year after year. You won't lose your money if you don't spend it within the year.

What happens to the money in a Health Savings Account after you turn age 65?
You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or 'Medigap' policy.

Once you turn age 65, you can also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 10% penalty on the amount withdrawn.

Can I use my HSA to pay for medical expenses incurred before I set up my account?
No. You cannot reimburse qualified medical expenses incurred before your account is established. We recommend you establish your account as soon as possible.

Who will be the 'bookkeeper' for my HSA?
It is your responsibility to keep track of your deposits and expenditures and keep all of your receipts. If you run out of HSA funds (and therefore need to use your HDHP), you may need to send those receipts to your insurer..

How do I use my HSA to pay my physician when I'm at the physician's office?
If you are still covered by your HDHP and have not met your policy deductible, you will be responsible for 100% of the amount agreed to be paid by your insurance policy to the physician. Your physician may ask you to pay for the services provided before you leave the office. If your HSA custodian has provided you with a checkbook or debit card, you can pay your physician directly from the account. If the custodian does not offer these features, you can pay the physician with your own money and reimburse yourself for the expense from the account after your visit.

If your physician does not ask for payment at the time of service, the physician will probably submit a claim to your insurance company, and the insurance company will apply any discounts based on their contract with the physician. You should then receive an "Explanation of Benefits" from your insurance plan stating how much the negotiated payment amount is, and that you are responsible for 100% of this negotiated amount. If you have not already made any payment to the physician for the services provided, the physician may then send you a bill for payment.

What do I have to do to 'establish' my account?
Your account trustee/custodian will determine what you need to do, which may include completing and processing appropriate paperwork, and making a minimum deposit.

What is the difference between an HSA 'custodian' and an HSA 'trustee'?
The differences between a 'custodian' and a 'trustee' are minor. A trust is a legal entity under which assets are actually owned and held on behalf of a beneficiary. The trustee has some level of discretionary fiduciary authority over the assets of the fund. The trustee must exercise that authority in the best interests of the beneficiary. A custodial arrangement, on the other hand, is like a trust, but the custodian simply holds the assets on behalf of the owner of the assets. Other than holding the assets and doing as the owner orders, the custodian has no fiduciary obligations to the owner. The determination of what constitutes a trust or custodial arrangement is a determination made under state law.

Can couples establish a 'joint' account and both make contributions to the account, including 'catch-up' contributions?
' Joint' HSA accounts are not permitted. Each spouse should consider establishing an account in their own name. This allows you to both make catch-up contributions when each spouse is 55 or older.

Must couples open separate accounts?
If both husband and wife are eligible to contribute to an HSA, they are both eligible to establish separate HSAs. However, if both spouses want to make 'catch-up' contributions when they are age 55+, they must establish separate accounts.

How soon can I open my account?
Your account can be established as early as the effective date of your HDHP coverage.

I want to make sure my HSA is 'established' as soon as possible. Can I establish my account before my HDHP coverage begins?
You can complete all the paperwork and make a minimum deposit to your account prior to the effective date of your HDHP coverage. However, your account is not officially 'established' until your HDHP coverage begins. But completing the necessary steps before your coverage begins ensures that your HSA will be 'established' as early as possible. This is especially important when your HDHP coverage is effective on a non-business day.

Who has control over the money invested in a Health Savings Account?
The account holder controls all decisions over how the money is invested. You can also choose not to invest your funds.

Can the funds in an HSA be invested?
Yes, you can invest the funds in your HSA. The same types of investments permitted for IRAs are allowed for HSAs, including stocks, bonds, mutual funds, and certificates of deposit.

Will my bank notify me if I've exceeded my allowable contribution amount?
No, it is your sole responsibility to keep track of the amounts deposited and spent from your account, just like a normal savings or checking account.

Can I borrow against the money in my HSA?
No. You may not borrow against it or pledge the funds in it. For more information on prohibited activities, see Section 4975 of the Internal Revenue Code.

Can I roll the money in a Health Savings Account over into an IRA?
You cannot roll the HSA funds over into an IRA. They will stay in the HSA or be rolled into another HSA.

Can I roll over an IRA, or FSA plan into an HSA?
A one-time contribution to an HSA of amounts distributed from an Individual Retirement Arrangement (IRA). The contribution must be made in a direct trustee-to-trustee transfer. The IRA transfer will not be included in income or subject to the early withdrawal additional tax. The transfer is limited to the maximum HSA contribution for the year, and the amount contributed is not allowed as a deduction. Generally, only one transfer may be made during the lifetime of an individual. If an individual electing the one-time transfer does not remain an eligible individual for the 12 months following the month of the contribution, the transferred amount is included in income and subject to a 10 percent additional tax.