Excerpt from the BPA Health Bulletin

Zywave Highlights: Health Savings Accounts

The following is an overview of Health Savings Accounts from the Zywave website. Visit www.brokerbriefcase.com/temp_doc.aspx?tmpid=6030&home=yes
to view the complete article.

It probably isn’t news to you that health insurance costs are on the rise. If you’ve been considering options for providing affordable benefits packages for your employees, you may want to look into a new type of account: the health savings account (HSA).

HSAs are consumer-focused, tax-favored accounts. In January 2004, HSAs joined the ranks of several other programs that were established to help keep medical expenses affordable, including flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and medical savings accounts (MSAs). A brief overview of HSA guidelines is as follows:

Who can contribute
Persons eligible to contribute to an HSA include individuals already covered under a high-deductible health care plan, individuals not currently covered by another health care plan that is not a high deductible health plan (see complete article for exceptions), and self-employed individuals. An account holder’s employer or his or her family members may also make contributions to an HSA.

Employer contributions
Should the account holder’s employer opt to contribute to one employee’s HSA, equal contributions must also be made to all participating employee accounts, either in dollar amount or on a percentage basis. Unlike MSAs, both employers and employees can contribute to an HSA account in the same year.

Contribution guidelines
For each month of coverage under a high deductible plan, eligible individuals may contribute one-twelfth of the lesser of 100% of the annual deductible or $2,650 for individual coverage or $5,250 for family coverage for the 2005 calendar year. This contribution limit is, however, reduced by any contributions made to an MSA during the same year.

HSAs offer yet another option for consumers to establish tax-free accounts for handling medical expenses. For more info on HSAs, visit www.treas.gov.offices/public-affairs/has, or contact your BPA representative.

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BPA Health Bulletin Spring 2005

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