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The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 authorized the establishment of new health savings accounts effective January 1, 2004. These accounts permit eligible individuals to save for, and pay, health care expenses on a tax-free basis.
What is it ?
There are two parts to a HSA:
HSA-Compatible Health Plan
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Health Savings Account (HSA)
What are the benefits ?
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Tax Deductible Contributions* - For 2010, you can deduct up to $3,050 for individual coverage and $6,150 for family coverage.
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Tax Deferred Growth* of earnings and interest.
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The contributions remain in your account from year to year until you use them.
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Tax Free Distributions* to pay for qualified medical expenses.
* Please consult your tax advisor or the IRS for more details.
How do I qualify ?
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You must be enrolled in a hsa-compatible health plan.
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You cannot be enrolled in Medicare.
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You cannot be claimed as a dependent on someone else's tax return.
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