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What is a Health Savings Account (HSA)?
Health Savings Accounts are a new option for health insurance that includes two parts. The first part is a health insurance policy that is offered from employers or purchased from an insurance agent that covers large hospital bills. These health insurance policies are referred to as High Deductible Health Plans (HDHP). For 2008, to qualify as an HSA-compatible HDHP, the insurance policy must have a minimum deductible of $1,100 for self-only coverage and $2,200 for family coverage.  The maximum out-of-pocket amount must be no more than $5,600 for individual and $11,200 for family coverage.  An HDHP generally costs less than traditional health care coverage costs, so the money that is saved on insurance can be put into the Health Savings Account.

The second part of the Health Savings Account is an investment or retirement account from which money can be withdrawn, tax-free for medical care. Otherwise, the money accumulates, earning tax-deferred dividends until needed. At age 65, the funds can be withdrawn for any purpose with no penalty and subject to normal income taxes.

Once you have your qualifying health insurance policy, you may open your investment account here at Elevations Credit Union.  Our Health Savings Account allows you to use pre-tax dollars to pay for future medical expenses.  Our members with Health Savings Accounts can:

• Make tax-deductible contributions
• Accumulate tax-deferred earnings
• Withdraw funds tax-free for qualified medical expenses

You can start planning for future medical expenses today!

Who is eligible to open a Health Savings Account (HSA)?
Any individual that meets membership eligibility with Elevations Credit Union, and the following criteria, may open an HSA Account:

• Covered by a High Deductible Health Plan (HDHP)
• NOT covered by other health insurance
• NOT enrolled in Medicare
• Cannot be claimed as a dependent on someone else’s tax return

Why would I want to open an HSA?
Opening a Health Savings Account offers you many benefits, including:

• Tax Deductibility
• Tax Deferred Savings
• Ability to save money for medical costs
• More control of medical procedures and decisions
• Lower insurance costs
• Retirement and Savings Planning

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How much can be contributed to a Health Savings Account (HSA)?
In 2008, the maximum contribution that can be made to an HSA for employees with Individual coverage will be $2,900*, while the maximum contribution for those with family coverage will be $5,800*.

The contribution limit is increased by $900 for an eligible individual who is age 55 or older.*

If you qualified for an HSA in 2007 and did not make your maximum contribution you have
through April 15, 2008, to contribute for the prior year.

The contribution limits for 2007 were $2,850 for Individual coverage and $5650 for Family
coverage, with $800 catch-up for those individuals who are age 55 or older.

Who can contribute to an HSA?
Anyone can make contributions to an HSA for an eligible individual.  Contributions made on your own behalf can be made on a pre-tax basis through your employer, or can be claimed as an “above-the-line” deduction from your income at the end of the year. 

If your employer makes a contribution on your behalf, it is not included in your taxable income.  Contributions made by others are always at the benefit of the HSA owner, and can be deducted by the HSA owner.  All contributions are aggregated and must not exceed IRS limits.

I just started a new job. Effective July 1st, I have a High Deductible Health Plan which qualifies me for an HSA. Can I contribute the maximum amount allowed for this year?
Prior to 2007, the HSA contribution was prorated based on the number of months that an individual considered an “eligible individual.” The new provisions provide an exception to this rule that will allow individuals who become covered under an HSA-eligible plan in a month other than January to make the maximum HSA contribution for the year based on their coverage in the last month of 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.

Are “catch-up” contributions allowed?
Yes.  For eligible individuals age 55 and older, additional contributions to HSA’s are allowed as follows:

• 2007    $800
• 2008    $900
• 2009 and later $1,000

When must HSA contributions stop?
Contributions to an HSA account must stop immediately once you are no longer an “eligible individual.”

Individual Retirement Accounts (IRAs) have an “Earned Income” requirements.  Do Health Savings Accounts have similar requirements?
No.  The IRS does not have any income requirements or limits on HSA Accounts.  As long as you are an “eligible individual” you may contribute up to the IRS limits.

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What can I use my HSA funds for?
HSA Funds may be used to pay for the following items tax-free and penalty free:

1. “Qualified Medical Expenses” such as:
1. Doctor visits
2. Prescription drugs
3. Hearing aids
4. Non-cosmetic dental treatments 
2. COBRA Insurance
3. Laboratory fees that are part of medical care
4. Qualified long-term care insurance and expenses

See IRA Publication 502, page 5, for a more complete list of qualified medical expenses. (http://www.irs.gov/pub/irs-pdf/p502.pdf)

Funds may be used for eligible expenses for spouses or dependants, even if they are not covered by the High Deductible Health Plan (HDHP). 

Income tax and a 10% penalty are charged for any non-medical withdrawal prior to age 65.

What happens to the money in my HSA if I lose or cancel my High Deductible Health Plan (HDHP) coverage?
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 or fail to meet the other eligibility requirements.  The funds in your account roll over automatically each year, until used.  You are no longer eligible to contribute to a HSA for the months that you are not an eligible individual.

What happens to unused funds at the end of the year?
Any unused funds carry over from year to year.  You can save your money for future medical expenses, and as long as you use the money for a qualified medical expense your funds are NEVER taxed.

Do I have to keep records of my medical expenses?
Yes. You are responsible for providing documentation to the IRS to prove the HSA distributions were used for qualified medical expenses.

What happens if I need the money for something other than qualified medical expenses?
Income tax and a 10% penalty are charged for any non-medical withdrawal prior to age 65.

Can I “rollover” or convert my IRA Savings into a Health Savings Account?
You may make 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. 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.

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What is the fee for Elevations CU Health Savings Accounts?
The set up fee is a small one-time charge, of $15.00.  No annual or per transaction fees are charged on Health Savings Accounts at Elevations Credit Union.

How do I sign up for an HSA?
HSA accounts can be opened at any branch or by mail.

How can I move my HSA from another institution to Elevations CU?
At Elevations, we want to make it as easy as possible for you to move your HSA funds here!  Simply stop by any of our branches or give us a call at 303.443.4672.  We’ll help you fill out the appropriate paperwork and then take care of all the other necessities.  After all, we are “Your partner to new heights!

My payroll office has asked that I provide them with a voided check or deposit slip to set up my direct deposit to my Health Savings Account. I do not have a check or deposit slip to provide to them. What do I do?
Your HSA Account number will be nine-digits beginning with 710.  The account structure to use when setting up your HSA account for ACH and Check orders is 13 digits in length.  The format is “1008” plus your HSA Account number. Elevations Credit Union's Routing Number is 307074580.

How do I learn more about Health Savings Accounts?
You can learn specifics about our Health Savings Accounts by contacting a Financial Service Representative at 303.443.4672 or 800.429.7626.  You may also visit your nearby branch and they will be happy to answer your questions.  For additional details on Health Savings Accounts visit: www.irs.gov.