HEALTH SAVINGS ACCOUNTS

Health Savings Accounts (HSAs) were created by Congress as part of the Medicare Reform Legislation and signed into law in 2003. HSAs allow employees in High-Deductible Health Plans (HDHP) to establish pre-tax savings accounts to be used for qualified medical expenses. A HDHP for 2009, must have a deductible that is at least $1,150 for self-only coverage or $2,300 for family coverage, and has an out-of-pocket expense limit that is no more than $5,500 in case of self-only coverage, and $11,600 in the case of family coverage.

An HSA is a special savings account that helps you save and pay for qualified medical expenses. You may use the funds to pay for expenses not covered by your HDHP, including the HDHP deductible, and after retirement, any expenses not covered by various parts of Medicare.

HSAs work a lot like an Individual Retirement Account (IRA). At present, you may contribute $3,000 per year if you participate in an individual HDHP or $5,950 if you participate in a family HDHP. Once you reach age 55 you can even catch up on contributions.

Earnings on the account may also be used to pay qualified medical expenses without incurring any tax liability. Unlike Flexible Spending Accounts (FSAs), the money placed into an HSA does not need to be spent the year it is deposited. In fact, it can be kept in the account indefinitely and used at any later point.

The ability to save money in an HSA allows your employer to offer you medical benefits at more competitive rates, thus minimizing or eliminating the amount you must contribute toward premiums. These savings can be used to fund your HSA while lowering your tax liability and preparing you for your future long term medical needs.

How does a KEMBA HSA benefit a business?

• Easy and convenient set-up. A KEMBA representative will come to the place of business during the enrollment period to answer any questions employees or employers have about the KEMBA HSA.
• Deposits and earnings can continue to grow from one year to the next.
• Tiered interest rates. The higher the account balance, the higher the interest rate.
• Employees can make their own payments using their Debit Card or check.

How does a KEMBA HSA benefit individuals?

• The dividends earned grow tax-free.
• Reduced income tax liability.
• Ease of opening an account.
• Low minimum opening deposit.
• Tiered interest rates to encourage long term savings.
• Easy access to funds. Pay with the HSA Debit Card or a check.
• Portability. The money belongs to the employee. If they change jobs or move, the money stays in the account and is theirs to use on qualified medical expenses.
• With the tax advantages and benefits of a HSA, employees are in control. Spending health care dollars wisely now can help save for future health care needs.

For more information about KEMBA HSAs, stop by one of our branches, or call 614.235.2395, option 4, or 800.282.6420, option 4.