FREQUENTLY ASKED QUESTIONS AND ANSWERS FOR
HSA
HEALTH SAVINGS ACCOUNT
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Questions:  18, 19, 20, and 21

18. Can I contribute to this plan up till April 15th, 2005 to obtain a deduction for 2004?

Yes, provided, of course you have HSA qualified insurance, and the maximum deductible amount is pro-rated based on the first full month your high deductible health plan was in place. To answer the question "What happens if on day two of having an HSA, am hospitalized, and do not have enough money built up in the account?" some insurers are selling a hospitalization rider (with a one time fee) that allows individuals or employees to be paid the amount they would have deposited into the HSA over the course of more than a year, if they are hospitalized in the initial months of having an HSA. The way that one insurer's rider works is that if in the third month of the HSA being in force the HSA policy holder is hospitalized for three days, the insurance company sends the insured a check for the deductible minus an assumed amount of three months deposit into the HSA account. (The rider does not assume the maximum allowable amount is deposited each month.)  So, in the case of this insurer, with this type of rider, the HSA insured uses this money paid to them to meet their deductible expenses, and their high deductible health insurance covers their other hospitalization costs, once their deductible is met.

19. I carry a private $2K deductible health ins. policy. Can I combine that with just the investment/savings part of an HSA? Can my ins. premiums be paid through the HSA?

Your insurer is the best one to answer that question, but assuming your health plan qualifies (and the deductible does qualify) then yes, you can just combine it with an HSA you open somewhere else. The only time you can pay your premium out of your HSA is when you are unemployed and are collecting unemployment. Please see question #5.

20. Who is eligible to open an HSA? Are there income restrictions similar to an IRA? Does an individual need to meet other guidelines?

The HSA eligibility criteria are simply that the health plan that the employee or the individual has conforms to the HSA qualified health insurance criteria. There are no income limits. To find out if your plan meets the criteria look under the question "Do I have an HSA qualified health plan?"

21. What is an Archer Medical Savings Account?

An Archer Medical Savings Account was the pilot project version of Health Savings Accounts. An Archer Medical Savings Account has numerous and confusing restrictions on who could use an Archer MSA and how it could be funded. These restrictions have been lifted. The Health Savings Account is the unrestricted version of an Archer MSA. You should not purchase an Archer MSA (even if you can find one.)
The restrictions on Archer MSAs were extensive: MSAs were allowed for only those whose company had 50 or fewer employees and for the self-employed. HSAs are available to everyone under 65, and there are no limits on the size of the company that can use them. Furthermore, MSAs limited the deposit into the account to only the employee or the employer, not both. The HSA allows both the employee and the employer to contribute into the account. The MSA had a numerical cap on the total number of MSAs that could be sold, and it had a sunset provision, which would have ended the pilot program totally. That provision served to keep insurers out of the market, so there were very few MSA insurers. HSAs are permanent. Finally, there was a limit of 65% of the deductible that could be deposited into the MSA for individuals, and a limit of 75% of the deductible that could be deposited into the MSA for family plans. With HSAs you can deposit 100% of the deductible, up to $5,150 for families and $2,600 for individuals.