Health Savings Accounts (HSAs)

Health Savings Accounts (HSAs) were created by the Medicare bill signed by President Bush on December 8, 2003 and are designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis.

HOW HSAS WORK:

A subscriber splits out funds two ways: first paying a premium (usually quite low) for a qualifying high deductible insurance policy; second, making contributions into a tax-deductible savings account (up to 100 percent of the plan deductible). You then use the savings account to pay for lower-dollar medical expenses or those that aren't covered by the health plan. Once you meet the deductible, the health insurance covers your medical expenses as defined in the policy.

GIVING TO AN HAS:

Any adult may contribute to a health savings account if they:

• Have coverage under a qualified "high deductible health plan."
• Have coverage under a qualified "high deductible health plan."
• Have no other first dollar mediacl coverage, like an employee sponsorship plan
• Are not enrolled in Medicare.
• Cannot be claimed as a dependent on someone else's tax return.

"The best way to look at it is just an alternative to a standard PPO or HMO health plan, Marta said. "Everything goes almost as is side by side to a regular health plan. The only difference is potentially you can save a lot of money if you're healthy and if you utilize it right."

06/06/05