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Saturday, January 31, 2009
Monday, January 19, 2009
A legal tidbit: Health Savings Accounts
A Health Savings Account (HSA) coupled with a high deductible health insurance plan is one way to cover the cost of your medical expenditures. This is potentially a good plan for an individual who is concerned about the high cost of unexpected emergencies but spends his or her health care dollars on services not covered by insurance contracts, such as a variety of holistic health care treatments. The way an HSA works is that you can contribute a portion of your income tax free to a specific trust account. The money in this account can only be used for medical expenses. In order to have an HSA you are required to have a high-deductible health insurance plan. This structure was designed to make it more affordable for individuals to have catastrophic health coverage as well as develop incentives for those individuals to save money to spend on preventative care. It was also designed to reduce employers’ cost of insuring their employees.
As a community that frequently operates outside of the constraints of insurance, it seems obvious that natural health practitioners would want to explore health savings accounts to help defray the cost of their own medical care as well as the medical care of their employees. This memo is meant to give you an overview of the basic requirements of a Health Savings Account. If you have an Archer MSA or a Medicare Advantage MSA the rules are a bit different. If you have any further questions please refer to the IRS publication 969 (found at www.irs.gov) or send me an email at lucy.forsten@gmail.com.
The basic idea behind a Health Savings Account (HSA) is that you or your employer can contribute a portion of your income to your HSA and you will not pay income tax on the money, either when you save it or when you spend it. In order to have an HSA you must be eligible and you must set up your account with a qualified HSA trustee (this includes a number of major banks).
Are you qualified?
To be qualified for an HSA you must meet the following criteria.
1. You must be covered under a high deductible health plan. To be a “high deductible health plan” in 2009 your minimum annual deductible must be at least $1150 for a single plan and $2300 for a family plan. *Note that if you are self-employed the cost of your medical and dental insurance may be deductible. Consult a tax professional to determine if you qualify.*
2. You may not have other health coverage, with some exceptions. You may have coverage for a specific disease or illness, accidents, disability, hospitalization (with a fixed amount per day or other time period), dental care, vision care, long-term care, or personal liability protection.
3. You cannot be enrolled in Medicare. There are special rules regarding those who may have had HSAs and who are enrolled in Medicare, as well as special rules regarding the Medicare Advantage MSA.
4. You cannot be claimed as a dependent on someone else’s tax return. (They would be the holders of the HSA if you are a dependent)
What can the money in my HSA pay for?
The money in your HSA can pay for your qualified medical expenses, as defined by the IRS. Unlike your average insurance plan, almost every legitimate health care expenditure is included in the IRS’ definition of a “qualified medical expense.” You should consult a tax professional or IRS publication 502 if you have a question regarding a specific expenditure.
You use your HSA to cover not only your own medical care, but also that of your spouse and any of your dependent children or adults.
How much can I contribute tax free?
How much you can contribute depends on the type of high deductible health plan coverage you have, your age, and when in the year you become an eligible individual (and when you become an ineligible individual). For 2009, if you are eligible for the full year and have a self-only coverage you can contribute up to $3,000; if you have family coverage you can contribute up to $5,800. If you are not eligible for a full year (regardless of when you begin), your contribution is limited. Also, anyone can contribute to your HSA, you, your employer, your spouse and your dependents may all make income-tax free contributions.
As a community that frequently operates outside of the constraints of insurance, it seems obvious that natural health practitioners would want to explore health savings accounts to help defray the cost of their own medical care as well as the medical care of their employees. This memo is meant to give you an overview of the basic requirements of a Health Savings Account. If you have an Archer MSA or a Medicare Advantage MSA the rules are a bit different. If you have any further questions please refer to the IRS publication 969 (found at www.irs.gov) or send me an email at lucy.forsten@gmail.com.
The basic idea behind a Health Savings Account (HSA) is that you or your employer can contribute a portion of your income to your HSA and you will not pay income tax on the money, either when you save it or when you spend it. In order to have an HSA you must be eligible and you must set up your account with a qualified HSA trustee (this includes a number of major banks).
Are you qualified?
To be qualified for an HSA you must meet the following criteria.
1. You must be covered under a high deductible health plan. To be a “high deductible health plan” in 2009 your minimum annual deductible must be at least $1150 for a single plan and $2300 for a family plan. *Note that if you are self-employed the cost of your medical and dental insurance may be deductible. Consult a tax professional to determine if you qualify.*
2. You may not have other health coverage, with some exceptions. You may have coverage for a specific disease or illness, accidents, disability, hospitalization (with a fixed amount per day or other time period), dental care, vision care, long-term care, or personal liability protection.
3. You cannot be enrolled in Medicare. There are special rules regarding those who may have had HSAs and who are enrolled in Medicare, as well as special rules regarding the Medicare Advantage MSA.
4. You cannot be claimed as a dependent on someone else’s tax return. (They would be the holders of the HSA if you are a dependent)
What can the money in my HSA pay for?
The money in your HSA can pay for your qualified medical expenses, as defined by the IRS. Unlike your average insurance plan, almost every legitimate health care expenditure is included in the IRS’ definition of a “qualified medical expense.” You should consult a tax professional or IRS publication 502 if you have a question regarding a specific expenditure.
You use your HSA to cover not only your own medical care, but also that of your spouse and any of your dependent children or adults.
How much can I contribute tax free?
How much you can contribute depends on the type of high deductible health plan coverage you have, your age, and when in the year you become an eligible individual (and when you become an ineligible individual). For 2009, if you are eligible for the full year and have a self-only coverage you can contribute up to $3,000; if you have family coverage you can contribute up to $5,800. If you are not eligible for a full year (regardless of when you begin), your contribution is limited. Also, anyone can contribute to your HSA, you, your employer, your spouse and your dependents may all make income-tax free contributions.
Mission Statement
Lucy C. Forsten founded Holistic Health Law in order to follow her dream of maintaining a law practice that supports and advocates for natural medicine practitioners in Oregon as they work to shift the health and the perceptions of health across the state and around the world. Her services include business development work such as contract drafting and review (insurance contracts, employment contracts, leases, partnerships, LLCs, and others), legislative advocacy, and representation in the case of fee disputes or disciplinary notices.
She is also available for simple reassurance. A quick phone call to an attorney who understands your business can calm your fears and help you take those preventative, proactive steps for the health of your business that you so often encourage your patients to take for themselves.
She is also available for simple reassurance. A quick phone call to an attorney who understands your business can calm your fears and help you take those preventative, proactive steps for the health of your business that you so often encourage your patients to take for themselves.
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