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FREQUENTLY
ASKED QUESTIONS AND ANSWERS FOR |
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22. Why were 25% of Archer MSAs purchased by those who had been uninsured for six months or more in 2001? In 2001, which is the last year that data exists from the IRS, 25% of those who purchased an Archer MSA were previously uninsured. The most rational explanation for this high percentage of people purchasing an Archer MSA is the low cost of a high deductible health insurance plan. (As the deductible increases, the premium decreases, making a high deductible health insurance plan much more affordable than traditional health insurance.) For the uninsured, the price of health insurance makes a big difference as to whether they are insured or not. In other words, for those who cannot afford a traditional health insurance plan, but still want protection against bankruptcy from an unexpected hospitalization, then a high deductible insurance plan is the best solution. 23. Can HSA accumulated funds eventually be used to pay for eldercare or nursing home/retirement facility? Yes, in fact, even before you reach that point you can pay for long term care insurance premiums with tax-free money out of your Health Savings Account. 24. Can you
expand on the statement that the contributions to an HSA are tax-free? Is
the contribution an individual makes to a non-employer sponsored HSA a
deductable expense to the individual? 25. Are over the counter drugs covered under an HRA? See the last page for a list of Qualifying/Non-Qualifying Medical Expenses. 26. Will I pay tax penalties on the monthly fees my HSA custodian deducts from my account? (These aren't qualified medical expenses.) The IRS has ruled that nominal bank and custodial fees withdrawn directly from the account are allowable withdrawals, and therefore, are not subject to taxes or penalties. Some trustees allow their HSA clients to choose their method of payment for custodial fees, with either a monthly debit from the account or by a check paid annually
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