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- HSAs
are owned by the individual and, as a result, are portable
regardless of the employer
- Individuals, employees, or both
can contribute to an HSA
- HSAs must be used in conjunction
with a qualified High-Deductible Health Plan
- HSA contributions
made by the employer are not counted as income and, therefore,
are not subject to individual
income tax
- After-tax HSA contributions made by the
individual are tax deductible (similar to an IRA)
- Individuals
age 55 and over can make “catch-up” contributions
that allow them to contribute an extra $500 per year
to an HSA
- Unused HSA funds can carry-over from year-to-year
with no “use-it-or-lose it” provisions
- HSA
funds can be invested in interest bearing savings accounts,
money
market accounts, stocks, etc. – just
like an IRA
- HSA funds are allowed to grow (interest,
capital gains) on a tax-deferred basis
- HSA withdrawals
for qualified medical expenses are not subject to income
tax
- Funds can be used at any time for non-qualified
purposes, but the withdrawals will be subject to income
tax and a
10% penalty
- Once you reach age 65, HSA funds can withdrawn
for non-medical reasons without the 10% penalty, but will
be subject to
standard income tax – just like an IRA
- If an individual
happens to be unemployed, available HSA funds can be
used to pay for health insurance premiums
and over-the-counter drugs
- An individual is eligible to have an HSA if he or she is:
- Covered by a qualified HDHP on the 1st day of a given month
- Not covered by another health plan (other than another HDHP)
- Not enrolled in Medicare (generally under age 65)
- Not claimed as a dependent on a tax return
- Not participating in a typical healthcare reimbursement flexible spending account
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