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Wednesday, May 22, 2013

I rarely pass by active duty military or a Veteran in uniform without stopping to say “thank you”.  I’ve even been known to anonymously pick up the tab for a group of active duty military who may be setting at a table close to me in a restaurant.  Our military is worthy of great respect.

Occasionally I come across something that puzzles me a bit in regards to Veterans, and my blog today is about one of those puzzling moments. 

Health Savings Accounts (HSAs) were signed into law in 2003. HSAs, when coupled with a high-deductible health insurance plan, allow consumers to put money aside in a tax-deferred account to pay for current and future medical expenses. 

Each year the government sets the limit for how much can be deposited into these accounts.  For 2013 you can deposit $3,250 (or $6,450 if you have dependents on your health insurance).  You can also deposit an additional $1,000 if you are 55+.

This is true for everyone but Veterans, and this is what puzzles me.

I admit I don’t understand the logic in the legislation, but the facts are clearly laid out.  If you use VA benefits for anything other than dental, vision, or preventive care, you are ineligible to deposit money into your HSA for three months.  If you use your benefits once, you reduce your allowed deposits into your HSA by one-fourth.  Use them twice and you could be cutting your allowed HSA deposits by half. Puzzling indeed!

There is some encouraging news, however.  A Veteran recently asked me if going to the VA for a service-related injury would disqualify him for depositing into his HSA.  It was a good question and well worth running by our contact at the Treasury Department. 

According to our contact, going to the VA for a service-related injury does not disqualify you from making deposits into your HSA.  Why?  Because the VA visit is for a specific “accident” related injury.  The HSA legislation does allow for accident coverage in addition to the qualified health insurance, and this treatment falls into that category.  That news certainly made my day!

It is also heartening to know there has been legislation introduced on more than one occasion that would disregard VA benefits entirely when considering HSA deposits.  No news on this yet.  It’s comforting to know we have national heroes who protect our freedoms and our form of government so these wheels of a free republic can turn.

If you’re a Veteran or active duty military – Thank You.  Next time your meal is paid for at a restaurant remember that it’s because someone appreciates your service.  It’s a small token of a grateful heart.


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Posted by HSA Admin at 5/22/2013 10:26:00 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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