Exam (elaborations)
Health Savings Accounts (HSAs) Questions and Answers 2023
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Health Savings Accounts (HSAs)
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Health Savings Accounts (HSAs)Special Savings Plan - answer Replaced medical savings accounts in 2003
Combination of a savings account and a high deductible health plan
Funds may be used the the individual, their spouse, and their dependents
Deductibles are embedded or non-embedded
Embedded Deductible - answer An HSA has 2 deductibles: an individual and a
family deductible
Individual deductible embedded into the family deductible, permitting each family
member the opportunity for their policy to cover their medical bills before the total family
deductible is met
Non-embedded Deductible - answer Only has the family deductible
The entire deductible must be met before the plan pays any benefits
Deductible can be satisfied by one family member or by several
Eligibility - answer -Cannot have other health insurance coverage (except disability
income, long-term care, or limited coverage)
-Cannot be eligible for Medicare
-Cannot be dependent on another persons' tax return
Contribution Limits - answer Minimum deductibles and contribution limits are indexed
The maximum out-of-pocket spending (the maximum amount an individual must spend
before catastrophic coverage begins to pay 100% of qualifying medical expenses) in an
HSA is $6, 250 for a single individual and $12,500 for a family
Tax Benefits - answer The employer and employee make contributions to the HSA
Contributions are vested immediately
Contributions are tax deductible for individuals and are made on a salary-reduction
basis.
employer-made contributions are not taxable income to the employee
Funds can be used tax-free (no tax on principal or interest) for qualified health expenses
If funds are used for a non-health purchase, a 20% penalty plus tax is assessed
Funds rollover from year to year
Withdrawals made after the age 65 are taxed but not penalized
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