Introducing Health Savings Accounts
The constant changes in health insurance plans and their costs can be overwhelming.
As a way to help manage expenses, many employers and individuals opt for a High-Deductible
Health Plan (HDHP) along with a Health Savings Account.
What is a High-Deductible Health Plan?
A High Deductible Health Plan (HDHP) is a health benefit plan that typically offers
lower premiums in exchange for higher annual deductibles when compared to traditional
health plans. Generally, this is a health plan that does not cover first dollar
medical expenses however some high deductible plans may offer first-dollar coverage
of preventative care and still remain qualified to use in tandem with a Health Savings
To be an HSA compatible or “qualified” HDHP, the plan must meet the requirements
of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 for
minimum deductibles and out-of-pocket maximums.
Click here to view 2012 Deductible Limits, Out
of Pocket Expense Limits and Contribution Limits.
What is a Health Savings Account (HSA)?
An HSA is a tax-favored savings account established exclusively for the purpose
of paying or reimbursing qualified medical expenses of you, your spouse and your
dependents. It is owned by you, is 100% vested, and lets you build up savings for
future needs. A requirement for opening an HSA is that it be coupled with a qualified
high deductible health plan (HDHP) that covers catastrophic medical expenses after
The funds in an HSA can help pay your HDHP deductible and qualified medical expenses
not covered by your insurance policy, including but not limited to:
How does a HSA benefit you?
Routine Healthcare Expenses
The Health Savings Account provides you with:
How can I open an HSA account?
- Tax Benefits: Contributions to an HSA are fully deductible, the earnings
grow tax-deferred and distributions for qualified medical expenses are tax-free.
Consult with your tax or legal professional for guidance.
- Savings Flexibility: There are no limitations on frequency of deposit,
only on the total deposit amount per year. The account can be used with any eligible
HDHP and contributions may be made as late as April 15th of the following year.
- No Use-It-Or-Lose-It Clause: The account belongs to the individual. You
can use the funds as you need them. Funds remaining in the account at the end of
each year roll over for future expenses and savings.
- Easy Access: Withdrawals can be made to pay for qualified medical expenses
via check or debit card provided with the account.
- Additional Benefits: Money saved in an HSA can be used to pay COBRA or
other medical insurance premiums during periods of unemployment or temporary layoff.
- Check your eligibility.
- Are you covered under a qualifying High-Deductible Health Plan? YES. If you
have any questions about whether your current plan is considered an HDHP, check
with your employer or insurance agent
- Are you entitled to Medicare? NO.
- Are you claimed as a dependent on another person’s tax return? NO.
- Confirm your eligibility.
- Contact your current Human Resources Representative if you are insured through your
- Contact your Health Insurance Agent.
- Stop in at a Capitol National Bank office and open your account. When
you’re ready, we’re here to help!
To qualify for a Health Savings Account, you must be participating in a qualified
High-Deductible Health Plan (HDHP). Other limitations may apply. Check with your
insurance agent or tax advisor to confirm eligibility.
HSA Questions & Answers