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Yes. It is a prerequisite all persons enrolling or opening a HSA account have a HDHP. Later, if you terminate your HDHP, enroll in Medicare or choose coverage from a non-HDHP, you may continue to use the remaining funds but may not continue to contribute to the account.

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Monies placed in an ordinary savings account do not receive the same tax benefits as those associated with a HSA. The funds or monies in the HSA, whether made as contributions, earned as interest or withdrawn for qualified medical expenses, are not subject to federal income taxes and in most cases, state tax. Additionally, eligibility for a HSA requires enrollment in a qualified high-deductible health plan (HDHP).

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As long as the HSA distributions are for eligible medical expenses, i.e. doctor’s office visits, pre-deductible amounts and coinsurance, the distributions are tax-free as defined by Internal Revenue Code Section 213(d). Non-eligible distributions are taxed at a 10% penalty as part of gross income. After age 65, the 10% penalty is waived, although, the distribution is treated as taxable income.

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Having a, or multiple, HDHP(s) will allow you to open and contribute to an HSA, the only exceptions to having additional health coverage are:

• Dental or Vision Coverage
• Accident/Disability Coverage
• Long-term Care Coverage
• Hospital Insurance Plan (HIP)-type Coverage or Disease Specific Coverage

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No, the policy does not have to be in your name to open a HSA. For example, you may open a HSA, even if the HDHP is in a spouse’s name. If you receive coverage under a HDHP, you may open a HSA; assuming you already satisfy the eligibility requirements to contribute to a HSA.

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Unfortunately not. A HSA is for individuals only. We suggest the following for spouses covered under a family HDHP:

• Open individual accounts, contribute to both accounts, yet be aware the collective total of contributions to both accounts may not exceed the family contribution maximum.
• Open a HSA in one spouse’s name and contribute up to the family maximum.
• Understand although HSAs are individual accounts, the available funds may cover eligible medical expenses for any family member.

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Income levels do not affect HSA eligibility. However, your entitlement to the full tax advantages offered by HSA accounts is dependent on filing a federal income tax return. HSA contributions, earnings and distributions for eligible medical expenses are not taxed.

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No. Parents may not open individual HSA accounts for dependent children, or children which may be classified legally as dependents on your tax return. If the child is claimed as a dependent, use your or your spouse’s, HSA account funds to pay for eligible medical expenses.

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Yes, you may open a HSA account. Your eligibility is not affected despite your dependent’s non-HDHP coverage, or dependent’s coverage under your HDHP. Even if your dependent is not covered by a HDHP, you may use the HSA account to pay for your or your dependent’s eligible medical expenses.

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Yes, given the following:

• The FSA is limited to vision and dental coverage only.
• Prior to meeting the HDHP deductible, the FSA does not provide additional coverage above/other than preventive care.

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No, you may not have a HSA, if your spouse’s FSA or HRA will cover your eligible medical expenses prior to you fulfilling the HDHP deductible.

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Yes. Anyone may contribute to your HSA on your behalf, including family members.

HSA contributions made by family members on your behalf are tax deductible when computing your adjusted gross income.

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No, contributions to the HSA may be made at any time during the year, in any increments. Additionally, you may contribute to the HSA through April 15th of the following year; i.e. 2006 contributions may be made up to April 15th, 2007. Ways to contribute include:

• One lump sum at the beginning of the year
• One lump sum at the end of the year
• In equal parts throughout the year

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IRS guidelines establish contribution limits which are related to your health plan deductible. Each year the federal government updates these limits to account for inflation. For 2006:

• The maximum annual contribution is equal to the lesser of the health plan deductible or $2,700 for individuals and $5,450 for families. Rollover amounts from previous years and/or a medical savings account or another HSA, does not count toward the maximum annual contribution.
• Additionally, persons between the ages of 55-64 may contribute an additional amount of $700 (in 2006) above the maximum amount to their HSA. Deemed a “Catch-Up Allowance”, it will increase in $100 increments every year through 2009.

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Excess contributions above the established limits are subject to an excise tax of 6% for each taxable year. Avoid the excise tax on excess contributions, by withdrawing excess contribution amounts before the last day prescribed by law (including extensions) for filing federal income tax returns for that taxable year.

HSA contributions submitted by your employer which exceed the contribution limits are included in your gross income.

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Yes, you may contribute to your HSA, but the amount you may contribute is prorated based upon the number of months of coverage eligibility for the remaining calendar year. For example, your HSA coverage under a HDHP begins June 1, and continues through December 31, therefore, you may contribute 7/12 the amount of the maximum total annual contribution.

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Persons contributing to HSA accounts must use cash, or may contribute via MSA or HSA rollover. Rollover contributions are unique because contributions in the form of cash are not required and contributions are not subject to the annual contribution limitations. Persons are not allowed to make rollover contributions from an IRA, a 401(k) plan, a health reimbursement account (HRA) or a FSA.

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Yes, you may invest the excess HSA funds, once your account balance reaches a specific amount. HSAs, similar to investment types permitted for IRAs, allow you the ability to invest in stocks, bonds, mutual funds and certificates of deposits.

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Each spouse may contribute up to the amount of the deductibles under their respective accounts. However, the individual spouse’s contributions cannot exceed the individual contribution, which is subject to change on an annual basis.

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Under a HDHP, if either spouse has family coverage, both spouses are considered having family coverage. If each spouse has family coverage under different health plans, the contribution limit is the lesser plan deductible amount, divided equally between both spouses, unless agreed on a different division of funds.

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You may contribute the full “Catch-Up” contribution irregardless of when in the year your 55th birthday happened, if you had a HDHP for the full year. If you did not have the HDHP for the full year, your “Catch-Up” contribution will be prorated for the number of full months you were eligible.

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Yes, if both spouses are eligible individuals and both spouses establish a HSA in their name. If only one spouse has a HAS, then only he/she may make a “Catch-Up” contribution to their HSA.

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In general, no, health insurance premiums are not eligible medial expenses. The following are exceptions:

• Health care coverage while receiving unemployment compensation
• COBRA health care continuation
• Qualified long-term insurance

If you are over 65 years of age, you may use HSA funds to pay the following premiums:

• Medicare Part A and/or Part B
• Medicare HMO
• Medicare Prescription Drug Coverage
• Premiums for employer-sponsored health insurance, or employer-sponsored retiree plan

Medicare Supplemental premiums are not eligible.

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No. Once you establish the HSA, distributions may be made for services incurred prior to a contribution being made, as long as, you received the service on or after the date you established the HSA.

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The only available window for reimbursement is during the first 10 days after you receive the benefits booklet and policy ID card. If you decide not to accept the policy, return the booklet and ID card. If we receive these items within 10 days, we will offer a full reimbursement of the initial premium. Once 10 day window elapses, the refund is ergo prorated.

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Claims may qualify as an eligible HSA expense, despite, the claim being denied due to lack of medical necessity or another reason. As long as the eligible medical expense is outlined in IRS Code Section 213(d), you may use your HSA funds, including claims denied due to lack of medical necessity.

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In order to use HSA funds, persons do not need to have HDHP coverage, nor do they need coverage from the account holder’s HSA. You may use HSA funds for:

• The account holder
• The spouse of the account holder
• Any dependent

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HSA contributions are tax-deductible, and distributions for eligible medical expenses, as well as, HSA earnings are not taxed. Also, HSAs are tax exempt.

All contributions made to your HSA (subject to contribution limits), are tax-deductible, irregardless, if you itemize deductions. We recommend you consult your tax adviser for additional details surrounding the associated taxes, because you cannot also deduct the contributions as eligible medical expenses under IRS Code Section 213(d).

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The HSA custodian, Mellon Trust of New England, will issue HSA contribution and distribution reports to utilize while filing tax returns.

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If married, the ownership of the HSA will pass to your spouse. If unmarried, the HSA will become part of your taxable estate.

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Immediately contact your provider and determine how the refund will take place. It is paramount the refunded amount return to the HSA account, thereby, avoiding the tax penalties associated with diverting funds for non-eligible medical expenses.

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No. All financial arrangements and transactions are between you and your doctor.

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Present your insurance ID card to allow the pharmacist access to your eligibility and claims information. Pay the amount owed to the pharmacy. Prior to meeting your deductible, you are responsible for the full discounted drug rate. Once the deductible is met, you are responsible for the full coinsurance amount. Along with your medical claims, all pharmacy claims are applied to your overall deductible.