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WHO CAN GET AN HSA AND WHAT IS COVERED? You must be covered by a High Deductible Health Plan (HDHP) to take advantage of HSAs. You also must: not receive coverage under another health insurance plan, not be enrolled in Medicare and not be someone else’s dependent. An HSA works in conjunction with high deductible health insurance. These types of plans cost less than low deductible and copay plans. Typically, your HDHP premiums will be about 50% lower. Your HSA money can be used to help pay the health insurance deductible and qualified medical expenses not covered by the health insurance, including dental and vision. Your HSA account earns tax-free interest and, in some plans, can be used for different types of investments such as mutual funds or money market accounts. For 2010, the federal law limits tax deductible HSA annual contributions to $3,050 for singles and $6,150 for families. The 2010 out-of-pocket expense liits for HDHP's will be $5,950 for singles and $11,900 for families. Deductible limits for 2009 will be $1,200 for singles and $2,400 for families. Most expenses for medical, dental and vision care will be reimbursed under your HSA with some exceptions such as cosmetic surgery and health club dues. A list of reimbursable expenses is available on the IRS Web site, www.irs.gov. Examples of qualified medical expenses:
Internal Revenue Code section 213 allows a tax deduction for expenses paid by a taxpayer for medical care, including over the counter (OTC) items. Qualified OTC medical expenses may be paid for or reimbursed from a Flexible Spending Arrangement (FSA) or health reimbursement arrangement (HRA) such as an HSA. In July 2009 the IRS provided additional information on what qualifies as medical care to include: care for the prevention of disease “only if there is a present existence or an imminent probability of developing a disease, physical or mental defect, or illness.” To learn more about the deductibility of OTC items visit: http://www.irs.gov/publications/p969/ix01.html. Helpful Links:
Learn More: Important details about health savings accounts Or Compare: Calculate your savings by owning an HSA
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