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Health Savings Accounts (HSAs) were created by the Medicare bill signed by President Bush on December 8, 2003 and are designed to help individuals covered by a high-deductible health plan save for future qualified medical expenses on a tax-free basis. Contributions* made to an HSA are tax deductible. Account earnings and withdrawals that are used to pay qualified medical expenses are not taxed. Unlike cafeteria plans, monies put into an HSA can accumulate from year to year.
HSAs are a great vehicle for small and large businesses, as well as professionals and individual health care customers, to take advantage of the favorable tax treatment and save money for current and future qualifying medical expenses.
For tax year 2005, a qualifying high-deductible health plan must provide a minimum deductible of at least $1,000 for individual coverage and $2,000 for family coverage. The high-deductible plan must also cap the insured?s out-of-pocket expenses at $5,100 for an individual and $10,200 for families. These amounts are indexed for inflation.
In addition, individuals establishing an HSA cannot be claimed as a dependent on someone else?s tax return and cannot be enrolled in Medicare.
There are limits on how much can be contributed to an HSA. For tax year 2005, the maximum amount is lesser of the plan deductible or $2,650 for individual coverage/$5,250 for family coverage. ?Catch-up? contributions are also allowed for eligible individuals age 55 or older who have not enrolled in Medicare.
With ongoing increases in health insurance costs, many employers are looking at high deductible plans to reduce expensive premiums. Employers may choose to pass these savings on directly to their employees by helping to fund HSAs on behalf of their employees. Whether a plan is funded by the employer or the employee, the Lake City Bank HSA account is a great product to assist in managing health care costs.
Deposits in a Health Savings Account at Lake City Bank are put into an interest-bearing checking account and account holders can access the account by debit card or check.
For more information about the advantages of establishing a Health Savings Account, please contact:
Abbe Muta
Assistant Vice President/HSA Manager
877-718-9198, ext. 7253
or
Lake City Bank One Call Center
574-267-9123
(toll free) 888-522-2265
* limitations and restrictions apply
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