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Thursday, August 8, 2013
Image courtesy of Boians Cho Joo Young at FreeDigitalPhotos.net

Of course we all love our HSAs.  But there may come a time when you find yourself in a position without a qualified HSA health plan. There is no need to panic.  You may not realize this, but you have been preparing for this type of dilemma. 

You also might find yourself in a situation where you no longer work for the company that provided your insurance, no longer have a qualified health plan or have no health insurance at all.  If you can relate, keep reading…help is on its way.

Funding Options

You can still deposit to your health savings account even though you are no longer on the qualified health plan.  Deposits are pro-rated based on the number of months you had the qualified insurance.  If you have not deposited your pro-rated amount at the time your insurance coverage ends, you have until April 15 of the following year, or the date you file your taxes (which ever comes first) to make those deposits and maximize your tax benefits.
 
HSA Account Options
 
If you’re worried about the funds in your account, don’t be.  Your health savings account was opened in your name and is owned by you.  Your account remains with you even after your HSA-qualified insurance ends, if you get on non HSA-qualified insurance, or if you change jobs.
 
You can leave your account open and continue to use the funds (tax-free) as needed for HSA-qualified medical expenses.
 
If you keep your account open and enroll in a qualified health plan at a later date, you can resume making deposits into your HSA.
 
You can let the funds grow in your account until age 65.  At that time the HSA can also be used as a retirement fund.  You can either pull the money out for any use (non-qualified medical expenses) and you will pay income tax, but no penalty.  Or you can continue to use the funds tax-free for qualified medical expenses.
 

HSA Options
Image courtesy of artur84 at FreeDigitalPhotos.net

 The funds in your HSA can also be used to pay COBRA premiums.  If you elect COBRA, you can also continue to make deposits into your account up to the maximum amount allowed each year.
 
If you have incurred qualified expenses since the date your HSA was opened, you can reimburse yourself for those expenses without paying a penalty or taxes (provided the expenses were not already paid from your HSA or by your insurance carrier).  You can reimburse yourself for any family member’s expenses, even if that family member was not covered under the insurance.  However, they would need to either be claimed as a dependent, or be a joint filer on your taxes (spouse).
 
HSA funds can only be rolled into different HSAs.  The funds cannot be rolled into any other type of account (such as an IRA). 
 
If you chose to close your account, you will pay a 20% penalty and income tax on funds that were not used for qualified medical expenses.  These are payable at the time you file your income tax return.
 
So just because you happen to find yourself in a position where you have HSA funds but no longer have a qualified health plan to go with it, you can still enjoy the benefits of the HSA!  After all you saw the value in contributing and saving money in your HSA.  Don’t worry.  Be happy.

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Posted by HSA Admin at 8/8/2013 6:37:00 PM
Wednesday, July 17, 2013
HSA Choices
Image courtesy of samuiblue at FreeDigitalPhotos.net

Wine, leather boots, jeans, flannel sheets, cast iron pans, decision making…  Can you guess what these items have in common?  If you said "they all get better with age", you are correct!

As we get older, we gain more knowledge through education and our own personal experiences.  Our ability to make better decisions about things life has in store for us increases.  For this post, we wanted to pass on some of our knowledge to educate you about two very relevant topics: your healthcare and your money.

What better way to do this than to talk about Medicare (as everyone will have to have it in one form or another), and relate it to health savings accounts, our area of expertise.  So without further ado, here’s a basic crash course on Medicare and HSAs.

The Basics of Medicare

Medicare and Your HSA
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net

Part A: Hospital coverage

It helps pay for inpatient hospital care, skilled nursing care, hospice care and other services.  Most people don't have to pay anything for Medicare Part A.  If you have had a job for at least 10 years with a company that offers Medicare-covered employment, then you don’t have to pay for Part A.  If you don't meet this requirement, you may have to pay a premium for Part A.  Part A is also paid for by a portion of Social Security tax.
 
Part B: Medical Coverage  
It helps pay for doctor’s fees, outpatient hospital visits, and other medical services and supplies that are not covered by Part A.  Part B is paid for by the monthly premiums of people enrolled, and by general funds from the U.S. Treasury.  Most people pay monthly premiums for Medicare Part B.
 
Part C: Medicare Advantage 
Medicare Advantage plans allow you to choose to receive all of your health care services through a provider organization.  These plans may help lower your costs of receiving medical services, or you may get extra benefits for an additional monthly fee.  You must have both Parts A and B to enroll in Part C.
 
Part D: Prescription Drug Coverage  
Medicare Part D is a prescription plan that reduces the cost of formulary drugs.  Part D is optional, and there is a premium paid for by those who are enrolled in this plan.  Unlike Part A in which you are automatically enrolled and must opt out if you do not want it, with Part D you have to opt in.  There may be a penalty for not enrolling in a prescription plan.
 
HSA Options When Delaying Medicare
 
Delay Medicare
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
If you have a job you love and choose to continue to work past the age of 65, you will delay your starting date to receive Social Security benefits.  Automatic enrollment in Medicare may not occur for you.  You will need to contact Medicare for instructions in enrolling.
 
Delaying enrollment in Medicare is a personal decision and requires time and research to see if you will benefit from such a delay.  Medicare enrollment affects your eligibility to continue to fund your HSA.  One requirement to fund an HSA is you cannot be covered by any other health plan that is not an HSA plan.  Medicare is not a qualified plan.  If you continue to work and stay on your employer-sponsored HSA plan and enroll in Medicare as well, you would not be able to fund your HSA for the months you are covered by Medicare.
 
If you do not enroll in any part of Medicare, including Part A, you are able to take advantage of continuing to fund your HSA. Nothing changes.  You can contribute up to the maximum allowed by the IRS increasing your nest egg.  You also still have the option of using the funds in your HSA for qualified medical expenses for yourself, spouse and any dependents or saving the money for use later. 
 
HSA Options When Enrolling in Medicare
HSA Choices
Image courtesy of jscreationzs at FreeDigitalPhotos.net
 
Once you enroll in Medicare, contributions to your HSA need to be prorated based on the month you enroll in Medicare.  If you enroll in August, then you can fund the amount for 7 months of having qualified coverage.  You do not have to contribute the allowed amount by the month you enroll in Medicare.  You have the same deadline as any HSA account holder.  The deadline to fund your HSA for 2013 is April 15, 2014 or the date your file your tax return, whichever comes first.
 
You can pay for Medicare premiums from your HSA when you turn 65.  This does not include supplemental premiums.  If your Medicare premiums are deducted from your social security allowance, you may be able to reimburse yourself from your HSA.
 
These premiums for your spouse can also be paid from your HSA as long as the account holder is 65 or older.  If your spouse is enrolled in Medicare, but you as the account holder are not 65 yet, your spouse’s premiums cannot be paid from your HSA. 
 
If you choose to close your account when you turn 65, the balance in your account becomes taxable income to you, but there are no penalties.  But, if you choose to keep your account opened and use the funds for HSA-qualified medical expenses, the monies remain tax-free…and this is a good thing!
 
Relax, You’ve Earned It
 
So now that you’ve got all the information you need, go put on your Tony Lamas and a favorite pair of Levi’s, cook some eggs and bacon in your cast iron pan and sit back and enjoy a glass of Ste. Chappelle Chardonnay.  When the moon comes out and the stars are shining, you can climb into your flannel sheets and have sweet dreams knowing that you have made the most educated and mature decision about your healthcare dollars.
Relax
Image courtesy of artur84 at FreeDigitalPhotos.net
 

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Posted by HSA Admin at 7/17/2013 10:43:00 PM
Monday, April 8, 2013

Are you eligible for a health savings account?

We were recently asked to clarify an individual’s eligibility to open a health savings account.   Having a high deductible health insurance plan (HDHP) does not necessarily mean the HSA is a slam-dunk.  There are still several other factors to consider before determining your eligibility to open an HSA, and we’ll cover them in this article.

Medicare#1. Enrollment in Medicare:

Enrollment in Medicare means you cannot fund an HSA.  That includes the part of Medicare you are automatically enrolled in at age 65.  If you’re on Medicare, don’t open an HSA.

If you already have a health savings account and are aging into Medicare, you don't need to close your HSA!  Even though you're ineligible to make contributions, you can still use the existing funds tax-free to pay for any HSA-qualified medical expenses, earn tax-free interest on the standing balance, and utilize any applicable investment opportunities.

 

Tricare#2. Enrollment in Tricare:

Enrollment in Tricare means you cannot fund an HSA.  If you’re on Tricare, don’t open an HSA.
 

On a side note, if your spouse is also on your insurance policy and is not enrolled in Medicare or Tricare, they may be eligible to open an HSA.  The nice part about this, is you would be able to use the funds your spouse puts in their HSA.  You can still benefit from the account; it just isn’t in your name.

Umbrella Insurance Coverage#3. Enrollment in Multiple Policies:

If you are covered under another health insurance policy you may not be able to open an HSA.  Exceptions to this scenario, would be another HSA-qualified insurance policy or one that is for a specific disease or illness – such as a cancer policy, or a policy that pays a fixed amount per day for a hospital stay.

Flex Spending Account#4. Having an Existing FSA:

Enrollment in a General Purpose Medical FSA (Cafeteria Plan) by you or your spouse can also affect your ability to fund an HSA.  A General Purpose Medical FSA covers any medical expense of you or your spouse without first applying a deductible. 
 
If your FSA covers just preventive care, dental and vision (called a Limited Purpose FSA) then you are fine to open an HSA.
 

If your FSA applies a deductible before payments are made (called a Post-Deductible FSA) then you may be able to open an HSA.  It will depend on the deductible for the FSA.  For 2013, that deductible would have to be at least $3,250 if it pays benefits on just you or $6,450 if it also pays benefits on your dependents.

#5. Usage of VA Benefits:

There is one more item worth mentioning here, and that is the usage of VA Benefits.  Enrollment in VA Benefits does not affect your ability to open and HSA, but how and when you use those benefits can affect the frequency of how you fund your HSA.
 
In order to receive deposits into your HSA, you cannot have used your VA Benefits at any time during the previous three months, except for the three areas listed below:
  • Dental
  • Vision
  • Preventative Care 
 

Here’s a flyer with some examples of how your health savings account can work with your health savings account:

VA Benefits With Your HSA by American Health Value

 

That wraps up our list of the 5 most common scenarios that could potentially alter an individual's ability to open a health savings account. As you can see, the high deductible health insurance plan (HDHP) itself is the first thing you must have in place to open an HSA, but it is not the only factor taken into account when determining your overall HSA Eligibility.

As always, we are more than willing to help you navigate any of your questions about health savings accounts, whether you currently have yours with us or not.  Please feel free to contact us with any questions or comments & we look forward to hearing from you!


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Posted by HSA Admin at 4/8/2013 9:17:00 PM
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